Shares in John Fredriksen’s Flex LNG shot up today after it followed up a major expansionary move last week with strong business in a buoyant spot market.
TradeWinds reported yesterday Flex had netted a blockbuster $165,000 per day spot voyage for a vessel believed to be the 175,000-cbm Flex Ranger (built 2018).
According to Arctic Securities the sister ship Flex Enterprise has now reportedly secured work at $170,000 to $175,000 per day.
Its analysts say there is now only one vessel available worldwide and further improvements are expected to spot earnings.
Shares in the Oslo-listed Flex climbed by 6.99% to NOK 15.30 each on Tuesday, with Bloomberg suggesting the stock had experienced its best trading day in more than a year.
Data from the Oslo Stock Exchange shows the stock has improved by 18.15% in the year-to-date.
Chris Snyder, an analyst at Deutsche Bank, says LNG spot rates have more than doubled in the past three months and are up by more than 200% year-on-year.
“Spot rates are now at the highest level since 2012, which presents a very favorable backdrop for the upcoming Q3 earnings season,” he said in a report.
“We note that brokers have reported fixtures as high as $165,000 and there is some discussions of fixtures in the $180,000 range as strong demand out of Asia and limited available tonnage have put ship owners in the driver's seat.
“With global liquefaction capacity ramping at the fastest pace in history and slowing vessel supply growth, we expect the market will remain very favorable for LNG carrier owners.”
Flex last week swept up five newbuildings from major shareholder Fredriksen backed by an overnight equity raise.
Anders Karlsen, an analyst at Danske Bank, says Fredriksen’s reduced holding of 44.6% is positive as it cuts the risk of inter-company conflicts.
”Moreover, by concluding the transaction FLNG’s market cap and liquidity improve,” he said.
Following last week’s deal Nicolay Dyvik of DNB Markets believes it is time for a discount which has been associated with the stock to close.
Dyvik says Flex has moved from being a small-cap company with limited liquidity to a near $1bn firm targeting a US listing in the near term.
“Nothing compares with FLEX LNG, in our view; no other LNGC stock can provide the same exposure to a brewing LNG super-cycle,” he said.
