Steady at 12% yield

Another abrupt change

The US Trade Representative on 17 April published revised US port fees with significant changes to the initial proposal based on industry feedback. In its current form, the fees will primarily discourage use of Chinese-controlled maritime trade services to the US, and directly affect the use of Chinese-built vessels in US ports (with several considerable exemptions to avoid harm to US trade). The previous broader fees based on fleet composition and share of Chinese-built vessels has been scrappe...

Flex LNG (Buy, TP: NOK320.00) - Set to hold course on 14% DPS yield

With ~90% of days fixed for 2025 and 2026, and a cash balance of 11x its ‘regular’ quarterly dividend, Flex LNG’s USD0.75 DPS looks insulated from market storm, offering a compelling 14% yield. Additionally, we expect freight markets to recover from 2026, with current newbuild prices implying a long-term TC contract of cUSD90k/day to justify the investment, in our opinion supporting a firm long-term rate outlook. We reiterate our BUY but have cut our target price to NOK320 (340).

ABGSC Shipping Daily 31 March

‘The times they are a-changin’

The recurring theme at our 18th Energy & Shipping Conference was geopolitical uncertainty and a potential trade war, warranting a wait-and-see approach, particularly on the Trump 2.0 effect. The consensus view pointed to high asset values, with no rush to the yards, aligning with below-NAV valuations across most of our coverage. However, panellists generally saw less downside risk than the 25% average discount to steel for our Tanker, Dry Bulk and Gas coverage. Overall, the day highlighted uncer...

Well protected in this market downturn

Flex LNG Minor model adjustments

We have updated our estimates following the Q4 report. We still believe Flex LNG’s solid contract backlog, leading to limited spot exposure near-term, and ample liquidity (11x its Q4 dividend) leave it well placed to maintain its quarterly USD0.75 DPS for an attractive 12% run-rate dividend yield, despite our expectations for the current historically weak freight market to remain soft for at least 2025. We do not consider these changes to be material, and we have not changed our BUY recommendati...

A playbook on US tariffs

As a response to recent news flow of potential tariffs and countermeasures, we highlight the main implications for the shipping sectors we cover. While the specifics remain uncertain, the below input might assist in gauging potential impacts of the disruptions.

Q4 in line, FY'25 guidance as expected

Flex LNG (Buy, TP: NOK340.00) - DPS likely shielded from market lull

With limited spot exposure in 2025–2026e and ample pro forma liquidity of c11x its ‘regular’ USD0.75 quarterly DPS, we see support to maintain a 12% dividend yield. We also see re-rating potential of its contract backlog, and calculate a 16% earnings yield assuming ‘open’ vessels (with no extension options exercised) are contracted at the 2019–2024 average 2-stroke 1-year TC rate of USD110k/day in 2027. We reiterate our BUY, and have raised our target price to NOK340 (335).

ABGSC Shipping Daily 29 November

Container spot rates up again 3% w-o-w, contract rates flat, HAUTO signs 2-year contract with a "major international car producer", Flex LNG announces 15yr time charter for Flex Constellation

Contract coverage turns MTM positive

Flex LNG (Buy, TP: NOK335.00) - 13% yield highly appealing

Flex LNG remains insulated in a challenging freight market, with only one vessel open into a potentially poor 2025, while the two positions for 2026 are still likely to see options extended into 2028. Lower rates have led to our minor near-term adjustments, but we see no reason to doubt its USD0.75 quarterly DPS, offering an attractive 13% dividend yield into better markets. We reiterate our BUY, but have cut our target price to NOK335 (345).

Q3 as guided, Q4 guided as expected

EBITDA of USD 70m (ABGSC and cons at 70m). Q4'24 guidance in line with expectations. Share to trade flat to slightly down vs peers.

Market outlook weakens further

Flex LNG Minor model adjustments

We have slightly adjusted our rate and financing estimates. We still forecast a healthy 2024–2026 dividend yield of 11% for Flex LNG. This is supported by its solid contract backlog with limited spot exposure in the next two years, mitigating risk to what we believe will become challenging freight markets. Additionally, we see upside potential to its cUSD80k/day average 2024–2026e TCE beyond the fixed contract period, with long-term charter rates (>5 years) of cUSD90k–100k/day. The Q3 results ar...

Flex LNG Minor model adjustments

We have updated our estimates for the Q2 results, updated guidance, and announced refinancing. We still see an attractive 2024–2026e dividend yield at 12%, supported by its solid contract backlog mitigating near- to medium-term market risk. We also see upside potential to our average 2024–2026e fleet-wide TCE of cUSD80k/day, with 5-year TC rates currently quoted at close to USD100k/day. We do not consider our estimate changes to be material, and we have not changed our BUY recommendation. We rei...

More upside than downside, but still a HOLD

Q2 much as guided, special dividend in H2'24?

EBITDA of USD 63m (ABGSC and cons at 66m). Q3'24 guidance slightly below expectations. Flat share price reaction.

Minor changes, fully priced

LNG trade increases 1% in H1'24, less than our 3% FY'24 forecast. In-line with cons ensus. HOLD, TP of USD 30 (unchanged).