Avance Gas was downgraded by DNB Markets on Monday.
Analyst Jorgen Lian cut his recommendation for the John Fredriksen-backed VLGC owner to “hold” from “buy”.
The target price was raised to NOK 172 ($15.8) from NOK 168.
“However, given the recent share price rise, we find the stock fully valued at a P/NAV of 1.05x,” Lian said in the note.
Avance Gas shares have almost gained 50% since a low at the beginning of March.
DNB sees first-quarter revenue of $86.9m, 9% above consensus, based on an average VLGC time charter equivalent of $75,200/day, compared with the first-quarter guidance of a fleet TCE of about $70,000/day discharge-to-discharge.
Lian expects a first-quarter dividend of $2.25 per share, based on an adjusted earnings per share of $0.79, sale of three vessels and cash release from lease refinancings.
For the Q2 guidance, DNB sees a fleet TCE of around $55,000/day.
Lian said the outlook for 2024 is “solid”, based on ample US inventories about 14% above the five-year average, supporting rates averaging $53,000/day since the start of March.
“Hence, we believe investors could expect a NOK 23 underlying EPS, boosted by vessel sales and cash release from refinancings, resulting in a 2024 DPS of NOK 45, or 28% of current share price, on our estimates,” Lian said.
Analyst reaffirms ‘buy’ rating for BW LPG
On a separate note, Lian maintained a buy recommendation for BW LPG with a target price NOK 199, up from NOK 196.
BW LPG closed at NOK 162.50 on Friday in Oslo.
DNB sees BW LPG report first quarter TCE income of $225m, leading to an adjusted Ebitda of $182m (30% above consensus).
Lian said “spot rates have persistently stayed above $50,000/day for the past eight weeks, and we believe 2024 is set to be another strong year for VLGC earnings”.
DNB sees BW LPG paying 16% of its market cap in dividends for 2024.
“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,” Lian said.
DNB kept its recommendation for Dorian LPG at “hold”, but raised the target price to $43 from $41.8.
“Despite a solid market outlook, we find the valuation fair at a P/NAV of 1.15x,” Lian said.
