BW LPG Ltd: 1 director

Two Directors at BW LPG Ltd bought/maiden bought 3,000 shares at 10.000USD. The significance rating of the trade was 52/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two yea...

Short-term estimates down, still a HOLD

Q3 above, Q4 guidance below

EBITDA of USD 190m (79% vs. ABGSC, 43% vs. cons.). Q4 guidance slightly below cons, but timing of AGAS deliveries could matter. Share price up 2-4%.s

BW LPG (Buy, TP: NOK205.00) - Well placed for recent challenges

Despite the soft VLGC rates, we remain positive on BW LPG and expect its integrated model with Product Services to offset some of the downside risk in rates on record-high FOB premiums. The underlying product market remains strong, leading to a solid USD72k/day average 2025 arbitrage, which, by utilising the arbitrage as spot rate, implies a potential 27% yield. We reiterate our BUY, but have cut our target price to NOK205 (250).

Too many moving parts

BW LPG (Buy, TP: NOK250.00) - Leveraging up into solid market

We believe the re-leveraged BW LPG, following its acquisition of 12 VLGCs, is well-placed to harvest solid earnings in what looks set to be a healthy freight market supported by limited 3% annualised fleet growth over the next eight quarters. With early signs of declining FOB premiums, we see potential for a return to shipowners’ historical share of the US-FE arbitrage, which we calculate results in a 24% earnings yield utilising the arbitrage as spot rate for 2025. We reinstate a recommendation...

Q2 slightly above, Q3 guidance in line with market

Adj. EBITDA of USD 135m (2% vs. ABGSC, 4% vs. cons.). Q3 guidance below cons., but in-line with the current market. Share price up 1-3% vs peers

Post-transaction current NAV of NOK 193/sh

Selling 12 VLGCs to BW LPG. Avance turns into a MGC-company. Post-transaction current NAV of NOK 139/sh.

BW LPG (No_rec, TP: NOK) - Recommendation and target price withdrawn

BW LPG and Avance Gas today announced an agreement for BW LPG to buy 12 VLGCs from Avance Gas for a total consideration of USD1,050m, including the issuance of 19.282m BW LPG shares to Avance Gas for a pro-forma ownership of 12.77% after the transaction. Given that DNB Markets is acting as financial advisor on the transaction, we have withdrawn our estimates, target price and recommendation.

BW LPG (Buy, TP: NOK241.00) - Solid outlook leaves upside potential

We expect the strong VLGC freight market to persist on solid US fundamentals fuelling the US/FE arbitrage, with the longevity backed by limited vessel deliveries over the next two years. We see upside potential to our estimates and calculate NOK70 DPS and NOK25/share net cash by end-2026 at spot rates equal to the current 1-year TC, which implies ~NOK250/share with a fleet value of ~NOK150/share on current broker quotes. We reiterate our BUY and NOK241 target price.

BW LPG (Buy, TP: NOK241.00) - Arbitrage suggests upside potential

Ample US inventories have supported the arbitrage, now implying cUSD110k/day, and with deliveries set to slow (28 vessels due until end-H1 2026 (40 in 2023)), we see solid VLGC earnings potential. Assuming shipping captures the entire arbitrage rate, we calculate an average Q3–Q4 dividend yield of ~25%, and still see multiples expansion potential with the peer group trading at a 1.3x P/NAV, which would imply a value of NOK250/share for BW LPG. We reiterate our BUY, and have raised our target pri...

BW LPG (Buy, TP: NOK199.00) - US listed, but still at a discount

Strong US inventories have supported the US-Far East arbitrage, currently implying a cUSD90k/day rate. Thus, spot rates have persistently stayed above USD50k/day, and we believe 2024 will be another solid year for VLGC earnings. We estimate BW LPG will distribute c16% of its market cap in 2024 DPS. With its US listing in place, we still see multiples expansion potential, with the peer group trading at c1.10x P/NAV, which would imply a cNOK200 share price for BW LPG. We reiterate our BUY and have...

Yard response and dry bulk qualms

Our trip to South Korea and China revealed Chinese shipbuilders are seeking growth to take on Korea’s established yards who are facing constraints. An eagerness to add capacity is one of our takeaways, as well as a gloomy outlook for Chinese real estate, which in our view should inevitably weigh on dry bulk demand.

A brewing challenge for the yards

Our 17th Annual Energy & Shipping Conference was well attended by investors and industry executives showcasing the still-growing interest for the sectors. Limited yard capacity is fuelling high newbuilding prices and raising freight rate expectations for the vast fleet renewal necessary in the coming decade. Long lead times underpin a bullish supply story for much of shipping in the coming years, albeit exposed to geopolitical risks affecting trade patterns. Our overall impression was general op...

BW LPG (Buy, TP: NOK196.00) - Bound to rebound

Despite a disappointing Q4 report and weaker market for US propane exports hampering recent rate momentum, we still believe BW LPG is attractively valued and freight markets should stay healthy on rebounding US production and slowing demand. We forecast cNOK50 DPS and net cash position of cNOK20/share by end-2026. Even on all-time low asset values leaves another cNOK75/share and limited downside risk, with attractive exposure to the market recovery. We reiterate our BUY, but have cut our target ...

BW LPG (Buy, TP: NOK204.00) - Dividends set to flow to shareholders

VLGC spot rates are down c80% from the peak, along with large draws on US inventories last week (11%) during cold weather. However, the US-Far East arbitrage is again trending up and implies cUSD60k/day rates, as an outlook for warmer US weather should allow propane inventories to remain above the 5-year average, which leaves potential for another rate upswing. We estimate a c32% dividend yield for Q4–Q1 and c23% for the next 12 months, the highest among LPG peers. We reiterate our BUY but have ...

US chill set to cool VLGC markets

News of abnormally low temperatures in the days ahead could see US domestic propane demand tailwinds shift to headwinds and potentially threaten LPG exports, as we believe inventory levels could be tested. The US–Far East arbitrage has narrowed from USD380/tonne to USD200/tonne and spot rates are starting to slip as we head into the low season. While the fundamentals still look appealing to us in the medium and long term, we find considerable risk of negative momentum in freight markets based on...

BW LPG (Buy, TP: NOK212.00) - Strong cash flow set to keep coming

We believe BW LPG represents a solid value proposition amid a strong VLGC market, which is fuelling FFAs of cUSD90k/day for 2024 and cUSD65k/day for 2025. Hence, there is a theoretical potential to lock in c60% of the market cap in cash flow by end-2025e, and near-term we expect the Q3 run-rate dividend yield of ‘just’ 22% to expand to >30% on delayed revenue recognition and a vessel sale during Q4 and Q1. We reiterate our BUY and have raised our target price to NOK212 (210).

BUYs with much to look forward to

The VLGC market has gone from strength to strength in a year that looked set to be hit by a daunting delivery schedule. Although we are not yet out of the woods, the market’s underlying vigour is building confidence in lasting returns, most notably from elevated US inventory, promising export growth and attractive arbitrage. Current forward FFAs are highly supportive for asset valuations, and we expect VLGC values to increase. Hence, we believe the VLGC equities at ~1.0x EV/GAV represent attract...