Drewry LNG shipping equity index up 12.7% year to date

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The Drewry LNG Shipping Equity Index increased 12.7% YTD (as of 2 May 2024), outperforming the S&P 500, which was up 6.2% during the same period. Drewry’s index has mainly been supported by the surge in Nakilat and Golar LNG stock prices, while the stock prices of Flex LNG declined. Nakilat LNG stock has mainly benefited from the order win of 25 conventional LNG vessels from QatarEnergy. Golar LNG share price has been supported by healthy 4Q23 results and increased interest from potential buyers for its FLNG solution while Flex LNG stock recovered recently following the firming up of LNG spot prices and the extension of long-term charter for Flex Endeavour from 4Q30 to 1Q32. Drewry LNG Shipping Equity Index remained flat in April.

In 1Q24, Nakilat revenues increased 1.2% YoY to USD 306mn (QAR 1,133.5mn) and net income rose 6.1% YoY to USD 113.3mn (QAR 419.9mn). The company expects the delivery of vessels related to the recent order win from QatarEnergy between 2026 and 2029.

LNG spot prices firmed up in April following the escalation of tensions in the Middle East. Iran’s recent attack on Israel has escalated the tensions in the Middle East and raised concerns over LNG trade through the Strait of Hormuz (SoH). We believe a partial closure will support LNG shipping rates as LNG importers exposed to Qatar and the UAE will look for alternative cargo. However, the situation could deteriorate if the closure extends to several weeks or months.

LNG spot shipping rates are expected to be softer for the next few months due to ample inventory and mild winter. LNG vessel asset prices have stabilised with a relatively softer charter rate.

Stock prices of LPG companies under our coverage were largely on a decline in YTD 2024 (as of 2 May 2024) as freight rates had declined steeply amid subdued LPG demand, ease in vessel availability driven by an increase in daily transits in the Panama Canal and unfavorable arbitrage. However, in April, the freight rates recovered slightly due to heightened chartering activity driven by improved arbitrage opportunities, leading to a rise in the share prices of LPG shipping companies.

BW LPG’s stock prices increased 29.1% in April, following the New York Stock Exchange’s (NYSE) approval of its listing. Its share started trading on NYSE on 29 April 2024. The company’s shares will maintain their listing on the Oslo Stock Exchange (OSE) alongside the NYSE listing. We believe this dual listing will increase its liquidity and will expose BW LPG to a much larger pool of potential investors compared to the OSE. Overall, the stock is down 2.8% on YTD basis.

Stealth Gas’ stock has increased by 5.4% in April as the demand for Pr vessels increased in April. This rise in demand stems from increased LPG demand in China, with PDH margins improving and two new plants starting operations in China. Overall, the stock is still down 6.0% YTD.

The share price of Navigator Holdings declined 2.1% in April but on YTD basis the stock was up 4.1% as most of its vessels are on time charter which provide consistent earnings and, consequently, stability to the stock price.