Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

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.

Thematic (Sector/Industry)

<ul><li>Vessel oversupply, which was the major cause of distress for LPG ship owners in 2017, will moderate over the next couple of years and will pave the way for recovery. We believe LPG shipping is past its cyclical bottom and the market imbalance should improve soon. Hence, we have turned positive on the sector, and that should reflect in share prices.</li><li>We expect tonne-mile vessel demand to outpace growth in tonne-mile supply, helped by the improved vessel utilisation rates on the back of growing long-haul LPG trade. Strengthening market conditions will also boost freight rates. In turn, the recovery in freight rates will support asset prices that could tick upwards if the recovery is robust in winter.</li><li>Valuations for LPG shipping stocks are attractive, and with fundamentals for 2018 getting better, we believe it is opportune to accumulate LPG shipping stocks. The LPG shipping stocks are trading below their net asset values. At current share price, we believe the upside potential is material and the probability of a downside is limited. Hence, we recommend investors to accumulate LPG shipping stocks and have accorded an Attractive rating to BW LPG (BWLPG NO), Navigator Holdings (NVGS US) and Stealth Gas (GASS US).</li></ul>

Vessel oversupply, which was the major cause of distress for LPG ship owners in 2017, will moderate over the next couple of years and will pave the way for recovery. We believe LPG shipping is past its cyclical bottom and the market imbalance should improve soon. Hence, we have turned positive on the sector, and that should reflect in share prices.We expect tonne-mile vessel demand to outpace growth in tonne-mile supply, helped by the improved vessel utilisation rates on the back of growing long-haul LPG trade. Strengthening market conditions will also boost freight rates. In turn, the recovery in freight rates will support asset prices that could tick upwards if the recovery is robust in winter.Valuations for LPG shipping stocks are attractive, and with fundamentals for 2018 getting better, we believe it is opportune to accumulate LPG shipping stocks. The LPG shipping stocks are trading below their net asset values. At current share price, we believe the upside potential is material and the probability of a downside is limited. Hence, we recommend investors to accumulate LPG shipping stocks and have accorded an Attractive rating to BW LPG (BWLPG NO), Navigator Holdings (NVGS US) and Stealth Gas (GASS US).

LPG Shipping Outlook – Past the Bottom of the Cycle

Event-Driven

Navigator Holdings (NVGS) and Enterprise Product Partners LP (Enterprise) have signed a letter of intent to jointly develop an ethylene marine export terminal on the Houston Ship Channel.  Enterprise would manage the construction, operations and commercial activities of the proposed terminal, which would be located at Morgan’s Point complex in Texas, the world’s largest ethane export terminal.  The proposed joint venture, in which NVGS will own 50%, is in the initial stages as it is subject to…

Navigator Holdings (NVGS) and Enterprise Product Partners LP (Enterprise) have signed a letter of intent to jointly develop an ethylene marine export terminal on the Houston Ship Channel.  Enterprise would manage the construction, operations and commercial activities of the proposed terminal, which would be located at Morgan’s Point complex in Texas, the world’s largest ethane export terminal.  The proposed joint venture, in which NVGS will own 50%, is in the initial stages as it is subject to…

DMFR – Navigator Holdings and Enterprise Product's Ethylene Terminal – Is This a Game Changer?

Equity Bottom-Up

Navigator Holdings (NVGS US, Neutral, USD 11) – 1Q17 – Lower freight rates, though fleet utilisation is encouraging; maintain Neutral view<ul><li>
Weak earnings but steadier on sequential basis: Navigator Holdings (NVGS) reported TCE revenue of USD 61m in 1Q17, down 10% over 1Q16 due to subdued freight rates. Vessel days increased to 2,870 in 1Q17 from 2,344 days in 1Q16, but it was overshadowed by the decline in average daily earnings, which dropped to USD 21,712pd in 1Q17 from USD 29,561pd in 1Q16.…</li></ul>

Navigator Holdings (NVGS US, Neutral, USD 11) – 1Q17 – Lower freight rates, though fleet utilisation is encouraging; maintain Neutral view
Weak earnings but steadier on sequential basis: Navigator Holdings (NVGS) reported TCE revenue of USD 61m in 1Q17, down 10% over 1Q16 due to subdued freight rates. Vessel days increased to 2,870 in 1Q17 from 2,344 days in 1Q16, but it was overshadowed by the decline in average daily earnings, which dropped to USD 21,712pd in 1Q17 from USD 29,561pd in 1Q16.…

Navigator Holdings (NVGS US, Neutral, USD 11)- Lower Freight Rates, Fleet Utilisation Is Encouraging

Navigator Holdings (NVGS US) - Earnings Weakness to Persist; Maintain Neutral Rating<ul><li>
Revenue drop on softer rates: Navigator Holdings (NVGS) reported operating revenue of USD 70m in 3Q16, down 11% y/y due to lower freight rates and lesser utilisation. The company’s revenue fell even though operating days increased as the average daily TCE rate was down 26% y/y to USD 22,975pd from USD 31,081pd during the same period last year. The reported revenue was 4% lower than our estimate as we had assumed…</li></ul>

Navigator Holdings (NVGS US) - Earnings Weakness to Persist; Maintain Neutral Rating
Revenue drop on softer rates: Navigator Holdings (NVGS) reported operating revenue of USD 70m in 3Q16, down 11% y/y due to lower freight rates and lesser utilisation. The company’s revenue fell even though operating days increased as the average daily TCE rate was down 26% y/y to USD 22,975pd from USD 31,081pd during the same period last year. The reported revenue was 4% lower than our estimate as we had assumed…

Navigator Holdings (NVGS US) - Earnings Weakness to Persist

Even though the market capitalisation of LPG shipping players has shrunk sharply, the valuations on forward basisare necessarily not cheap. With earnings expectations pared down, investors are unlikely to lap up the LPG shipping stocks, and hence, they will remain range-bound. We do not see investors willing to accord higher multiples, and we believe the share prices could trade within a range. Hence, we have trimmed our valuation forecasts and our base case is a Neutral stance on LPG shipping…

Even though the market capitalisation of LPG shipping players has shrunk sharply, the valuations on forward basisare necessarily not cheap. With earnings expectations pared down, investors are unlikely to lap up the LPG shipping stocks, and hence, they will remain range-bound. We do not see investors willing to accord higher multiples, and we believe the share prices could trade within a range. Hence, we have trimmed our valuation forecasts and our base case is a Neutral stance on LPG shipping…

DMER - LPG Shipping 2.0 - BW LPG, GASS US and NVGS US, Valuations Uncompelling Despite Correction

United States

Navigator Holdings Ltd. owns and operates a fleet of handysize liquefied gas carriers. It also provides international seaborne transportation and regional distribution services of liquefied petroleum gas, petrochemical gases and ammonia for energy companies, industrial users and commodity traders. The company currently operates twenty one handysize gas carriers, with three additional vessels and seven confirmed new buildings, making a total fleet of thirty owned handysize gas carriers and one chartered-in vessel. Navigator Holdings was founded in 1997 and is headquartered in London, the United Kingdom.

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Navigator Holdings (NVGS US)

LPG Shipping Outlook – Past the Bottom of the Cycle

Vessel oversupply, which was the major cause of distress for LPG ship owners in 2017, will moderate over the next couple of years and will pave...

Drewry Maritime Financial Research

DMFR – Navigator Holdings and Enterprise Product's Ethylene Terminal – Is This a Game Changer?

Navigator Holdings (NVGS) and Enterprise Product Partners LP (Enterprise) have signed a letter of intent to jointly develop an ethylene marine...

Drewry Maritime Financial Research