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BW Epic Kosan: Impressive results

BW Epic Kosan posted 1Q23 report this morning with a supreme control of the cost elements. Although the top line came in even slightly below our estimates, the bottom line showed a never-previously-achieved impressive USD 12m figure. The markets have recovered, but the uncertainty on the future development and somewhat substantial orderbook bring a bit of a risk to the case. Nevertheless, our estimates will be adjusted on the positive side post the report, while the recommendation is under consideration and is dependent on the share price movement.

The morning dawn came earlier than we predicted

BW Epic Kosan posted its 1Q23 results this morning. After the disappointing 4Q22 figures, we were surprised to see such a recovery so quickly. Although the revenues of USD 86.0m came in slightly below our USD 91.3m estimates, the suppressed costs led to USD 33.4m EBITDA vs. USD 31.6m our expectations and the record-high USD 12.0m bottom line. We were following the positive rate development during the quarter and anticipated it to translate into revenues with some lag, but this time the superb cost control was the main element.

Outlook: no cheers, but nothing too worrisome

The company communicated that the positive first quarter results were driven by a strong market in the West and early signs of recovery in China, but the threat of recession in key markets and higher interest rates with pending economic recovery in China provide significant reasons for uncertainty. For 2023, the newbuild vessel supply remains balanced with a small gas carrier fleet growth forecast of 2.2% before scrapping. However, the orderbook for the larger LPG segments was said to be more substantial. As for the rates, the stronger market continued into 2Q23, but can show seasonal weakness over the spring and summer.
Source: Norne Research

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