03.06.2019 kl 10:09 1302

DnB sin oppdatering
This report was completed and disseminated at 15:03 CET on 31 May 2019
Minor model adjustments
We have adjusted our estimates, owing to the Q1 actuals, which have led us to increase our depreciation forecasts somewhat due to IFRS16. We do not consider these changes to be material. In our view, the ratio between contract opportunities to open fleet is looking better than in quite some time, with two Australian contracts and one Southeast Asian contract (all awaiting FID). We reiterate our BUY and NOK66 target price.

Target price methodology

 Our target price continues to be based on 0.9x our one-year forward SOTP of NOK73/share. Our current charter-free SOTP is NOK71/share, and based on
an LNGC valuation for four FSRUs our SOTP is NOK41/share.
 Our bull-case fair value assumes 1.0x our probability-adjusted SOTP, withanother 10-year FSRU award.
 Our bear-case fair value is based on 1.0x our SOTP of NOK33/share, with an LNGC valuation for four FSRUs and assuming a NOK-8/share effect from Höegh Gallant.

Downside risks to our investment
 Slow progress in, or delays to, new FSRU projects.
 A pick-up in FSRU orders, which could have an adverse effect on earnings expectations longer-term.
 A reversal of a strong market for LNGCs, which would increase pressure to convert old LNG carriers into FSRUs.

DNB Markets investment case and how we differ from consensus
 We apply our LNG rate forecasts for FSRU 9 and FSRU 10, which are available for the LNGC spot market during our forecast period, pending longer-term FSRU employment.
 We are 3% below Bloomberg consensus EBITDA for 2019e, 1% below for 2020e and 12% below for 2021e.

Upside risks to our investment case
 Higher gas prices and a stronger LNG shipping market reducing competition from new entrants, and reduced focus on margin pressure.
 More FSRU projects awarded due to shorter lead-times, more flexible assets, and a lack of import infrastructure.
 Visibility concerning the earnings backlog, which could prompt the company to raise dividend payouts.

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