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BW Epic Kosan: Similar figures QoQ projected

BW Epic Kosan presents its figures next Tuesday and we anticipate the elevated performance to continue from the 3Q21. Covid-19 impact on shipping routes eases while the market fundamentals remain promising for the very specialized pressurized LPG shipping space. We made limited changes to our estimates prior to the report and reiterate Hold recommendation under an unchanged NOK 25/sh Target Price following the minimal share movement since our last update.

Positive rate movement during the quarter and beyond

We encountered a strengthening gas carrier market during the quarter, especially towards the end of the year, led by a recovery in Europe and healthy U.S. The gradual improvement in rates was seen throughout all the segments, no matter the size. Therefore, we anticipate the company to present slightly higher revenues than in the best-ever 3Q21, but somewhat lower other operating figures due to supposedly weaker margins.

Orderbook increased, still at low levels

The number of orders for international pressurized vessels has increased somewhat and currently ten vessels are scheduled to be delivered in 2022, seven in 2023 and one in 2024, a 6.7% increase in the existing fleet capacity. Notably, there are 15 ships 30 years or older which are potential scrapping candidates, but even without taking those into equation, the orderbook levels are very low, making BWEK very well positioned in the specialized market.

Hold reiterated after limited share movement

Once again, we would like to note that we find it very positively that the company is focusing on IMO 2030 and IMO 2050 goals and working not only to reduce emissions, but also among projects that support wider decarbonisation, such as shipping related to carbon capture and storage. We reiterate NOK 25/sh Target Price for the stock and still find the share fairly valued, thus Hold is kept.

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Source: Norne Research

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