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BW Epic Kosan – BUY NOK 22 (prev. BUY 20) – 1Q Preview: A start of a new era for the company
BW Epic Kosan, which we all knew as Epic Gas previously, is reporting its 1Q21 results next Wednesday. Due to uncertainty on accounting we present our expectations of the old part of the company for 1Q and add the projections of BW Kosan’s figures starting in 2Q, which might be changed if some other structure is revealed during the presentation. 1Q should be somewhat weaker for the company due to lower number of operating days and significantly increased oil price, but a more distant future looks solid and we reiterate Buy for the share at NOK 22/sh Target Price.
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Epic Gas: Stronger-than-predicted results and first-ever dividends
Solid cost control, despite Covid-19 impact, let Epic Gas report stronger results this morning than we predicted. The global LPG seaborne macro trends were revised down but not as pessimistic as forecast during 3Q20, while the recovery in 2021 is still expected. First-ever dividends were proposed by the company of USD 0.14069/sh. The combination with Lauritzen Kosan should be finished by end-1Q21. Following the more positive report than we predicted we are likely to raise our estimates and keep our Buy recommendation for the stock.
Better results than predicted following not as bad macro situation as feared
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.