BW Epic Kosan posted very solid 1Q22 report this morning. Although revenues lagged QoQ (not comparable YoY as 1Q21 was with BW Kosan not included), very strong margins brought the operating metrics to the record levels as well as the bottom line. Dividend of USD 0.028219/sh was proposed. The fundamentals are promising with the LPG seaborne trade growth still surpassing the anticipated fleet growth, but the uncertainty in the market due to Ukraine and Covid-lockdowns remains.

Very strong margins brought operating metrics to record levels

BW Epic Kosan posted its 1Q22 results this morning. The revenues came in at USD 90.6m (USD 95.9m expected by us). However, the margins surprised on the better end – despite communicating on being not immune to global inflation and having Covid-19 related OPEX increase, let alone the increasing global commodity prices and energy costs, the company managed to report very strong operating metrics. EBITDA came in at USD 33.3m (USD 26.1m expected) and EBIT at USD 14.2m (USD 10.8m expected). The bottom line of USD 9.1m closed the record-high quarterly results.

Outlook remains promising, but the uncertainty towards Ukraine and Covid-19 remains

The newbuild vessel supply was communicated to remain balanced with a small gas carrier fleet growth forecast of 2.2% before scrapping in 2022. This is still lower than the forecasted LPG seaborne trade growth, which is positive. However, the ordering of new vessels has picked up in the larger LPG segments despite higher commodity and technology costs. The company, as well as us, is carefully following the war in Ukraine and strict lockdowns in China related to Covid-19 impacts demand and logistics and there is a high uncertainty of how the situation on both ends emerges.

Dividends declared

The Board has declared an interim cash dividend of USD 0.028219/sh amounting to USD 4.5m. This provides ~1.3% dividend yield, but if the company pursues strong results throughout the year, we shall see much higher dividends for 2022. For now, our estimates should be upped somewhat following the strong report.
Source: Norne Research