Flex LNG (Buy, TP: NOK16.60) - High leverage, but manageable
FLEX LNG has added two newbuilds to its portfolio without needing equity financing, on our calculations. We calculate a USD~125m cash balance post vessel delivery of newbuild no.8 (not including cash flow from operations or higher leverage on existing LNGCs once longer-term contracts are secured). Hence, we see limited liquidity risk into 2020, thanks largely to strong backing by the main owner. FLEX is shelving FSRU for now to focus on being a pure LNG transportation company. BUY and NOK16.6 target price reiterated.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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