New York-listed Navigator Holdings was one of the few gainers in an otherwise down day for shipping stocks, rising over 11% largely thanks to an upgrade on the stock to "outperform" from Wells Fargo.
Shipping analyst Michael Webber said Navigator's fleet, some 34 handy and mid-size refrigerated and semi-refrigerated gas carriers, gives it "unique leverage to the early innings of a broader petchem and LPG export recovery trade."
In response to the upgrade, shares of Navigator added $1.10 per share to reach $10.55 at presstime. Most other shipping stock dropped amid an overall weaker US equities market for Monday.
While mostly exposed to the short-haul LPG cargo trade in the Americas and Europe, Navigator is grabbing other types of cargoes such as propylene. Webber estimates that petrochemical cargo volumes were up some 80% last year and should benefit utilisation numbers for the fourth quarter.
Further out, Webber believes Navigator will benefit from petrochemical cargoes coming out of new plants along the US Gulf Coast.
Energy logistics firm Enterprise has itself signalled a potential project to export the petrochemical gas ethylene from a new dock facility in the Houston Ship Channel. Webber says such a facility, if it were to be built, could tie up between eight and 12 ethylene-capable gas carriers. Likewise, Navigator could also potentially get into the business of carrying the chemical gas ethane, which is also seeing a growing seaborne trade.
"We continue to believe (Navigator's) ethane/ethylene exposure is a differentiating factor (and one that deserves a higher multiple and valuation relative to players who focus on the long-haul VLGC market," Webber said in a research report.
Wilbur Ross, head of WL Ross and the company's largest shareholder, is being nominated to the position of US Commerce Secretary. Webber says Ross' nomination will likely pose no issue for the company, with Ross' shares likely headed into a blind trust.
