Avance Gas Holding Ltd reports unaudited results for the first quarter 2023.

HIGHLIGHTS

• The average time charter equivalent (TCE) rate on load to discharge basis was $58,379/day compared to $46,478/day for the fourth quarter 2022, slightly ahead of guidance of $58,000/day. The TCE basis discharge-to-discharge was $55,479/day. The TCE rate of $58,379 includes FFA and bunker hedges representing a negative tce of $3,700/day.
• For the first quarter, we had a TC coverage of 41% at an average TCE rate of $40,000/day and spot voyages of 59% at $71,000/day.
• Daily operating expenses (OPEX) were $8,626/day, compared to $8,738/day in the fourth quarter of 2022.
• Net profit of $36.3 million compared to $34.7 million for the fourth quarter 2022, or earnings per share of 47 cents compared to 45 cents for the fourth quarter.
• During the quarter, the Company paid $0.50 in dividend, or $38.3 million, for the fourth quarter 2022.
• During the first quarter of 2023, the Company took delivery of VLGC Avance Rigel, the third of its six 91,000 cbm VLGC newbuildings from Deawoo Shipyard in South Korea. Subsequently in May, the Company took delivery of VLGC Avance Avior, the fourth of its six 91,000 cbm from Hanwha Ocean Shipyard (previously named Deawoo) in South Korea.
• In April 2023, the Board appointed Executive Chairman Øystein Kalleklev as CEO of Avance Gas. As a result, Mr. Kalleklev stepped down as Executive Chairman of the Company and act as a regular Board member as well as CEO.
• For the second quarter of 2023, we estimate a TCE rate for the quarter to be approximately $50,000/day on a discharge-to-discharge and load to discharge basis.
• The board declared a dividend of $0.50 per share or $38.3 million for the first quarter 2023.

Øystein M. Kalleklev, Chief Executive Officer, commented:

“We are today pleased to present the best first quarter results for Avance Gas ever with Net Income of $36.3 million for the quarter translating into earnings per share of $0.47. We have only delivered better first quarter numbers once and that was back in the first quarter of 2015. In relation to average TCE per ship, we have only delivered better first quarter TCE numbers once before and that was back in first quarter of 2015 when we delivered TCE of $65,000/day vs $58,000/day in the first quarter this year. Just like in 2015, the spot market for freight have been very strong this year and much firmer than most industry experts expected as there were concerns about the numerous VLGC scheduled for delivery this year.

We have however seen significant slippage of newbuilds, a large portion of the VLGCs carrying out special survey this year and this coupled with elevated arbitrage in the price of LPG from US to Far East has resulted in high willingness to pay for freight which we have been able to capitalize on as evident from our results.

Hence, we are not only delivering strong first quarter results, but we are also guiding very firm levels for the second quarter where we are now basically fully booked with expected Time Charter Equivalent Earnings of around $50,000 per day which is well ahead of our cash break-even in the low 20’s. We are now booking ships for voyages in the third quarter and with current spot rates at around $80-90,000 per day we remain upbeat about the prospects for also delivering healthy earnings in the second half of 2023. As we have taken delivery of Avance Avior today and we took delivery of her sister vessel Avance Rigel in February, we also have a higher earnings capacity with more ships on the water in the second half of the year.

Given the strong financial results, the constructive outlook for the second half of the year and our very sound financial positions with $220m of cash at hand at end of first quarter and full financing in place for the remaining two newbuilds, the Board is therefore declaring another quarterly dividend of $0.50 per share as we did in the fourth quarter last year. This should hopefully provide our investors an attractive annualized dividend yield of 26% based on our current quarterly dividend or 18% if we calculate basis our $1.40 dividend per share the last four quarters.”
Source: Avance Gas Holding Ltd