DMER - Gas shipping 2016 - Is capitulation over for gas shipping stocks?
2015: LNG/LPG shipping stocks fall prey to low oil prices
• The downward trend in share prices that started in 4Q14 intensified in 2015 as the rout in oil prices marred investor sentiment. The broad-based selloff in gas shipping stocks wiped out USD 5.7bn of cumulative market capitalisation of our coverage universe, translating into a 49% loss in 2015.
Consolidation wave set to begin in the VLGC sector?
• The VLGC market is highly fragmented as 54% vessel capacity is owned by small market players. We believe bigger players with financial flexibility will prefer to grow inorganically and establish their leadership in the sector. In our view, a wave of consolidation will be good for the sector as a whole because it will rationalise the vessel supply and bring efficiency in the pricing mechanism.
Little early to turn contrarian as oil prices may drift lower
• The plunge in the crude oil price came like a thunderclap for investors, who scurried to reduce exposure to energy stocks including LNG/LPG shipping counters. The analyst community turned negative on the gas shipping sector, as reflected in earnings estimate downgrades for FY16.
Investors must pick and choose to snap up a bargain
• As 2015 proved to be a roller-coaster ride for gas shipping investors, we recommend investors to take exposure in companies that have the advantage of being in a niche segment and reasonably sound balance sheets. While we concur that the overhang of low oil prices will remain on our gas shipping universe, investors should take note of the companies with distinct advantage over peers and take this opportunity to accumulate such stocks at historic low valuations. Our top two picks for 2016 are: Golar LNG and Navigator Holdings.
Drewry, since 1970, has been providing research and advisory services on the global Maritime and Shipping industries and has established itself as a firm with long history of credibility and expertise on various aspects of the maritime industry. Leveraging this in-depth market knowledge and understanding, we have extended our offering to deliver a unique, independent investment research service on globally listed companies operating in the maritime industry. Under the brand Drewry Maritime Equity Research and in accordance with the FCA, DMER led by Rahul Kapoor and his team, offers fundamental analysis on listed companies. DMER analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. By combining these market-leading resources with seasoned sector expertise and commercial awareness, we are able to offer a highly differentiated and comprehensive investment research service to prospective investors in listed maritime companies. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.