May set to mark low season low
FLEX LNG May set to mark low season low FLEX LNG is due to release its Q1 results on 29 May before market open. We forecast EBITDA of USD6.7m 5% below consensus. The group has now secured charter-out arrangements for two of its vessels, providing more earnings visibility. Rates reflect that the LNG freight market should continue to tighten. We reiterate BUY, but have raised our target price to NOK16.6 (16.2).
We expect Q1 EBITDA of USD6.7m 5% below Bloomberg consensus of USD7.0m. Our EBIT forecast of USD3.3m is 32% below consensus of USD4.9m and our net profit estimate of USD1.8m is 49% below consensus of USD3.5m.
Second time-charter agreement announced in April. Since its investor day in February, FLEX LNG has announced a 1-year (+1-year option) time-charter to integrated electricity and gas operator Enel. The charter will commence in H2 this year, at a rate believed to be in the mid-80s. A rate of USD85k/day on a 100% basis would be a slight improvement on our assumption of USD84k/day on a 95% spot. If Enel decides to take the option, the rate would increase, reflecting our view that the LNG freight market is set to tighten further into 2019.
We have trimmed our 2018e EBITDA by 4% on the back of an adjustment to Q1 utilisation for Flex Enterprise and the postponed delivery of its next MEGI vessel (which we assume has been postponed from original delivery in May), somewhat offset by increased earnings from the announced time-charter agreements.
Tonne-mile set to outpace supply growth to 2020. We forecast 10% fleet growth in 2018, 7% in 2019, and ~5% in 2020, below our 2018 tonne-mile demand forecast of 16%, 2019 of 14%, and 2020 of 10%. This leads us to believe TFDE rates will increase from USD46k/day in 2018 to USD62k/day by 2019, to USD78k/day by 2020.
We reiterate our BUY recommendation, while we have raised our target price to NOK16.6 (NOK16.2) due to currency effects. We continue to base our valuation on 12x our end-2019e fully delivered run-rate EPS of NOK1.38 (NOK1.35). We calculate a current NAV of NOK10.7/share, also positively affected by a stronger USD.
BUY
We expect Q1 EBITDA of USD6.7m 5% below Bloomberg consensus of USD7.0m. Our EBIT forecast of USD3.3m is 32% below consensus of USD4.9m and our net profit estimate of USD1.8m is 49% below consensus of USD3.5m.
Second time-charter agreement announced in April. Since its investor day in February, FLEX LNG has announced a 1-year (+1-year option) time-charter to integrated electricity and gas operator Enel. The charter will commence in H2 this year, at a rate believed to be in the mid-80s. A rate of USD85k/day on a 100% basis would be a slight improvement on our assumption of USD84k/day on a 95% spot. If Enel decides to take the option, the rate would increase, reflecting our view that the LNG freight market is set to tighten further into 2019.
We have trimmed our 2018e EBITDA by 4% on the back of an adjustment to Q1 utilisation for Flex Enterprise and the postponed delivery of its next MEGI vessel (which we assume has been postponed from original delivery in May), somewhat offset by increased earnings from the announced time-charter agreements.
Tonne-mile set to outpace supply growth to 2020. We forecast 10% fleet growth in 2018, 7% in 2019, and ~5% in 2020, below our 2018 tonne-mile demand forecast of 16%, 2019 of 14%, and 2020 of 10%. This leads us to believe TFDE rates will increase from USD46k/day in 2018 to USD62k/day by 2019, to USD78k/day by 2020.
We reiterate our BUY recommendation, while we have raised our target price to NOK16.6 (NOK16.2) due to currency effects. We continue to base our valuation on 12x our end-2019e fully delivered run-rate EPS of NOK1.38 (NOK1.35). We calculate a current NAV of NOK10.7/share, also positively affected by a stronger USD.
BUY
Redigert 21.01.2021 kl 09:39
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