Transport Sector, China and Asia-focused Research

Charles De Trenck

Event-Driven

Shipping, specifically LPG tanker shipping, made headlines this week with a takeover offer via an all-stock transaction from <a href="https://www.smartkarma.com/entities/21082" target="_blank" data-smartkarma-citation="entities:21082:1">BW LPG Ltd (BWLPG NO)</a> (in Norway, but controlled by the Singapore-based Sohmen-Pao family) for US-listed <a href="https://www.smartkarma.com/entities/19102" target="_blank" data-smartkarma-citation="entities:19102:1">Dorian Lpg Ltd (LPG US)</a>.For a quick summary of the proposed combined company of BW LPG and Dorian LPG please read the media <a href="https://www.hellenicshippingnews.com/bw-lpg-looks-to-acquire-hadjipateras-led-dorian-lpg-in-a-deal-worth-1-1-billion/" target="_blank">media stories</a> first. Then, for more on the offer direct from BW, please refer to the <a href="http://www.bwlpg.com/Media/May-2018-(1)/BW-LPG-PROPOSES-TO-COMBINE-WITH-DORIAN-IN-ALL-STOC" target="_blank">summary proposed offer</a>.BW LPG is already the largest VLGC (very large gas carrier) player, but there are good reasons for BW LPG to move on Dorian LPG. And there may be additional drivers coming into play.We look at recent history and current issues &amp; drivers in our update.

Shipping, specifically LPG tanker shipping, made headlines this week with a takeover offer via an all-stock transaction from BW LPG Ltd (BWLPG NO) (in Norway, but controlled by the Singapore-based Sohmen-Pao family) for US-listed Dorian Lpg Ltd (LPG US).For a quick summary of the proposed combined company of BW LPG and Dorian LPG please read the media media stories first. Then, for more on the offer direct from BW, please refer to the summary proposed offer.BW LPG is already the largest VLGC (very large gas carrier) player, but there are good reasons for BW LPG to move on Dorian LPG. And there may be additional drivers coming into play.We look at recent history and current issues &amp; drivers in our update.

Shipping Consolidation: BW LPG Bids for Dorian LPG in $1.1bn EV Valuation

Equity Analyst

Nikesh Shukla

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Equity Bottom-Up

Will minimum dividend policy support Euronav’s stock?Revenues in line with estimates, losses greater than expected: Euronav (EURN) reported operating revenue of USD 99.3m for 1Q18, in line with our forecast of USD 97.9m. The operating revenues are down 40% over the same quarter last year as average VLCC and Suezmax spot rates at USD 18,725pd and USD 14,000pd respectively, during the quarter were 53.8% and 41.7% lower compared with rates in the same quarter last year. The Time Charter Equivalent…

Will minimum dividend policy support Euronav’s stock?Revenues in line with estimates, losses greater than expected: Euronav (EURN) reported operating revenue of USD 99.3m for 1Q18, in line with our forecast of USD 97.9m. The operating revenues are down 40% over the same quarter last year as average VLCC and Suezmax spot rates at USD 18,725pd and USD 14,000pd respectively, during the quarter were 53.8% and 41.7% lower compared with rates in the same quarter last year. The Time Charter Equivalent…

Will Minimum Dividend Policy Support Euronav’s Stock?

On 21 December 2017, Euronav NV (EURN US) announced that it had agreed to acquire all outstanding shares of New York-listed Gener8 Maritime Inc. (GNRT US) in a share-for-share merger. Earlier, GNRT and the John Fredriksen-backed Frontline (FRO US) were reported to be in talks for a business combination after FRO’s failed bid to acquire DHT Holdings Inc. (DHT US). However, the discussions were short-lived. Euronav will acquire all 82.9m of issued and outstanding GNRT shares with 60.9m EURN shares (0.7272 EURN shares for each share of GNRT) and acquiring net debt of USD 1,175.9m. The proposed transaction translates into an enterprise value of USD 1,669.2m for GNRT’s fleet at EURN’s closing price of USD 8.10 per share on 20 December 2017. GNRT’s fleet comprises 21 VLCCs, six Suezmaxes, one Aframax and two Panamax tankers, with an average age of 5.4 years.We believe the transaction, once completed, would be value-accretive to EURN’s common shareholders as EURN’s NAV will increase from USD 7.88 per share to USD 8.25 per share. The expanded fleet capacity will expand EURN’s customer base and the company’s market share in global crude oil transportation.

On 21 December 2017, Euronav NV (EURN US) announced that it had agreed to acquire all outstanding shares of New York-listed Gener8 Maritime Inc. (GNRT US) in a share-for-share merger. Earlier, GNRT and the John Fredriksen-backed Frontline (FRO US) were reported to be in talks for a business combination after FRO’s failed bid to acquire DHT Holdings Inc. (DHT US). However, the discussions were short-lived. Euronav will acquire all 82.9m of issued and outstanding GNRT shares with 60.9m EURN shares (0.7272 EURN shares for each share of GNRT) and acquiring net debt of USD 1,175.9m. The proposed transaction translates into an enterprise value of USD 1,669.2m for GNRT’s fleet at EURN’s closing price of USD 8.10 per share on 20 December 2017. GNRT’s fleet comprises 21 VLCCs, six Suezmaxes, one Aframax and two Panamax tankers, with an average age of 5.4 years.We believe the transaction, once completed, would be value-accretive to EURN’s common shareholders as EURN’s NAV will increase from USD 7.88 per share to USD 8.25 per share. The expanded fleet capacity will expand EURN’s customer base and the company’s market share in global crude oil transportation.

A Christmas Present for Gener8 Shareholders - Euronav

Lead Analyst, Credit Research, Drewry Maritime Financial Research

Konstantinos Oikonomopoulos

Lead Analyst, Credit Research

Credit

Credit positives<ul>
<li>The new international bond issue of USD 150m 7.5% 2022 provides further liquidity and also diversifies Euronav’s funding sources at a time when bank lending is scarce (Basel IV on the way).</li>
<li>Euronav is targeting an increase in charter contracts amid the challenging freight market. The group announced the extension of the FSO contracts until 2022 (exp. USD 36m free cash flow annually) and the signing of two new charter contracts for seven years (Suezmax vessels) to Valero, which…</li>
</ul>

Credit positives
The new international bond issue of USD 150m 7.5% 2022 provides further liquidity and also diversifies Euronav’s funding sources at a time when bank lending is scarce (Basel IV on the way).
Euronav is targeting an increase in charter contracts amid the challenging freight market. The group announced the extension of the FSO contracts until 2022 (exp. USD 36m free cash flow annually) and the signing of two new charter contracts for seven years (Suezmax vessels) to Valero, which…


Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Results in line with estimates as earnings turn red: Euronav (EURN) reported operating revenue of USD 127.9m for 2Q17, which is in line with our estimate of USD 130.2m. The revenue declined by 33.2% from USD 191.6m in 2Q16 as average VLCC and Suezmax spot rates (USD 28,351pd and USD 17,341pd respectively) during the quarter were ~40% lower than rates during the same period a year ago. TCE revenue dropped 37.2% y/y to USD 111.8m, and is in line with our estimate of USD 115.5m. Adjusted EBITDA for…

Results in line with estimates as earnings turn red: Euronav (EURN) reported operating revenue of USD 127.9m for 2Q17, which is in line with our estimate of USD 130.2m. The revenue declined by 33.2% from USD 191.6m in 2Q16 as average VLCC and Suezmax spot rates (USD 28,351pd and USD 17,341pd respectively) during the quarter were ~40% lower than rates during the same period a year ago. TCE revenue dropped 37.2% y/y to USD 111.8m, and is in line with our estimate of USD 115.5m. Adjusted EBITDA for…

Euronav NV (EURN US) – Supply-Side Pressure to Suppress Earnings and Hurt Valuation

United States

Euronav NV is a shipping company. The Company is engaged in the ownership, operation and management of tankers for the carriage of crude oil.

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Euronav NV (EURN US)

Shipping Consolidation: BW LPG Bids for Dorian LPG in $1.1bn EV Valuation

Shipping, specifically LPG tanker shipping, made headlines this week with a takeover offer via an all-stock transaction from BW LPG Ltd (BWLPG NO)...

Charles De Trenck

Will Minimum Dividend Policy Support Euronav’s Stock?

Will minimum dividend policy support Euronav’s stock?Revenues in line with estimates, losses greater than expected: Euronav (EURN) reported...

Drewry Maritime Financial Research

A Christmas Present for Gener8 Shareholders - Euronav

On 21 December 2017, Euronav NV (EURN US) announced that it had agreed to acquire all outstanding shares of New York-listed Gener8 Maritime Inc....

Drewry Maritime Financial Research

Euronav NV Credit Research

Credit positives The new international bond issue of USD 150m 7.5% 2022 provides further liquidity and also diversifies Euronav’s funding sources...

Drewry Maritime Financial Research

Euronav NV (EURN US) – Supply-Side Pressure to Suppress Earnings and Hurt Valuation

Results in line with estimates as earnings turn red: Euronav (EURN) reported operating revenue of USD 127.9m for 2Q17, which is in line with our...

Drewry Maritime Financial Research

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