John Fredriksen’s Avance Gas has raised expectations of a bumper dividend after impressing analysts in Oslo with the sale of a VLGC on Wednesday.
Avance, the top-performing shipping stock on the Oslo Stock Exchange last year, announced that it had offloaded the 83,700-cbm Venus Glory (built 2008) for $66m.
It is the latest in a string of deals that will mean the shipowner banks a profit of $121m in the next two quarters.
Pareto’s head of research, Eirik Haavaldsen, said: “The price is obviously impressive”, considering the broker valued the Venus Glory at $76m when Avance went public a decade ago.
The price is $2m higher than what BW LPG sold the 82,400-cbm VLGC BW Princess (built 2008) for in late 2023 and 10% higher than the $60m that Avance Gas collected for the 83,700-cbm Iris Glory (built 2008) last year.
After a series of sales in the past year, Avance Gas has a strong cash position and a robust balance sheet with falling net debt.
“Such a balance sheet is very untypical of John Fredriksen, so we would expect some sizeable, extraordinary dividends here at some point,” Pareto said in a note.
Pareto now thinks Avance’s net asset value could move from NOK 139 ($13.55) towards NOK 160 by year-end. The broker has a “buy” recommendation with a target price of NOK 167.
Fearnley Securities analyst Oystein Vaagen also expects “big payouts coming” in 2024.
Assuming 75% of book gains being paid out, he envisages yields of around 20% from the fourth quarter of 2023 to the second quarter of this year when adding his earnings-based payouts, with potential upside on the latter, given current rate strength.
DNB analyst Jorgen Lian said: “The sales price represents a 25% premium to the $52m value for the vessel in our NAV based on the latest broker values.”
This amounts to around NOK 130 per share and illustrates a potential upside to the company’s NAV.
Lian has a “buy” recommendation on Avance and a target price of NOK177.
ABG Sundal Collier said the Venus Glory price was $2m above its estimate for a 2008-built VLGC.
