BW LPG (BWLPG) reports Q2 results on the 29th. The company is the largest public listed owner of very large gas carriers, with a fleet of 38 VLGCs, and is poised to benefit from surging LPG demand. The higher the price spread between US and Asian LPG, the more the demand for LPG shipments from the US. Coupled with congestion at ports and the Panama Canal, which lower the effective capacity of the fleet, and the higher the profits for vessel owners. With Europe scrambling for any and all forms of energy, the trend in LPG transportation is long-term bullish. The company reported Q1 2022 TCE rates of $36,900 per day, as compared to $31k/day in 2021, $36.4k in 2020 and $35k in 2019. I expect rates to pick up and remain elevated as supply chains adjust to account for disruptions due to the Russia-Ukraine situation.
Zooming out to the monthly chart, the stock is at an 8-year high and up 210% from the March 2020 low. Even after this move, the stock is still 10% below book value of NOK 89.37. Balance sheet is healthy with a net debt to equity ratio of 0.39x. BW Group owns 40% of the company. There have been no insider sales reported recently. Funds have been net buyers and the company is recommended as a Buy by 7 of 7 analysts, with an average price target of NOK 96.12, or 19% above yesterday's close.
We're up 36% on this trade so far and I expect to continue riding this further. A weekly close below NOK 73 would make me re-evaluate my trade thesis.
Good Trading!
Kashyap