Epic Gas: Business Combination With Lauritzen Kosan Might Adjust The Picture
Epic Gas posts its 4Q20 report next Wednesday. Following somewhat declining rates and having in mind winter holidays and the pandemic, we expect results on the weaker side. We have not included the potential business combination with Lauritzen Kosan anyhow in our model until it is official and more details are announced, which were planned in 1Q21. Until then, we reiterate Buy recommendation for the stock at an unchanged NOK 19/sh Target Price.
Somewhat weaker quarter expected
There were some signs of weakness during the quarter – the rates for pressurized LPG vessels declined, expenses should build up following not only the pandemic, but also oil price gradually increasing, which continued into 2021. Therefore, we anticipate USD 8.8m in EBITDA and a negative bottom line to be reported in 4Q20, while our estimates for FY2021 were also cut.
Stolt-Nielsen: Bright lights still ahead
Stolt-Nielsen issues its 4Q20 (September-November) results next Thursday being the usual Canary in the Coal Mine. We anticipate figures to be solid seeing the Chemical Tanker sector as one of the winners in the time of pandemic. We moderately expect the quarter to be more comparable to 2Q20 numbers suggesting that 3Q was exceptionally strong, but even repeating 2Q would be a success in our view. The long-term view was strengthened following the JV with John T Essberger, while the stock reacted positively to the news on Stolt Sea Farm exploring possible IPO. We raised our TP to NOK 150/sh keeping Buy recommendation for the stock.