Tuesday, July 8, 2014

Recent Buy - Avance Gas Holding Ltd

4th July 2014 I Bought 200 shares of AVANCE at NOK 154.00 (€18.22) per share plus commission.

Avance Gas is one of the world’s leading very large gas carriers (VLGC) shipowners and operators. Including the newbuildings, we operate a fleet of 14 modern VLGCs transporting LPG around the world. Avance Gas transports LPG from either Middle East Gulf or US Gulf to destinations in Europe, South America, India and Asia. Avance Gas chartering strategy is to offer our customers a combination of spot voyages and Contract of Affreightments. Avance Gas Holding Ltd is a Bermuda-based company. commercial operation is based in Oslo, Norway.



Avance Gas Holding Ltd (AVANCE) was listed on the Oslo Stock Exchange on 15 April 2014. You can read more over company's history here.


The company's main shareholders are Frontline 2012, controlled by shipping magnate John Fredriksen, who has a strong record of creating shareholder value. The company's second key shareholder is Stolt-Nielsen, the world's largest chemical shipping company, a segment that shares the same market dynamics and customers as LPG shipping. This relationship offers Avance Gas a solid operational platform with a qualified workforce and established customer relationships. It's expected, that Avance Gas to adopt an aggressive dividend policy, under which it will seek to pay out a large part of its generated net profit to shareholders.


Source: Avance Gas Presentation

The dividend history of Avance is short, it has so far paid dividends only twice, so it cannot under any circumstances be considered the dividend growth stock. The Board of Directors declared an interim dividend of $0.50 per share on April 29, 2014 and on June 25, 2014 $0.30 per share.

Analyst estimates for next years:

Source: Danske Bank Markets

After listed on the Oslo Stock Exchance, Avance's share price has grown up relativ fast. 

Source: Company Home Page



Here are some target prices from Nordic banks for Avance:


  • Danske Bank reiterates its buy recommendation with price target 210 NOK.
  • Nordea reiterates its buy recommendation and raises its price target from 155 to 168 NOK.
  • Swedbank believes Avance is well positioned to gain a good market for VLGCer and raises its price target from 160 to 170 NOK.
  • DNB Markets believe in a record earnings in the LPG industry and raises price target on Avance Gas from 190 to 222 NOK.


Reuters mean rating for Avance Gas is 1.73 

If the analyst estimates are correct for the next 4 quarter, my last purchase 200 shares of AVANCE increases €186.25 ($253.30) of expected annual dividend net income, which increases my portfolio projected annual dividend net income to €7347.38. With purchase price €18.22 (NOK154.00) plus commission my starting yield on cost is 6.84%.

Click here to see my portfolio.

Full Disclosure: Long AVANCE
 

10 comments:

  1. Kiitos vinkistä! Asetuin tiukasti peesiin ja avasin pienen position - sata kappaletta alkuun. Ruusutarhasta terveisiä!

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    1. Moi Kinski
      Toivottavasti kaasua riittää hyvään hintaan kuljetettavaksi seuraavien vuosien aikana, muuten laivat täyttyy pelkällä turskalla!

      Hyvää kesänjatkoa,
      DH

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    2. Moi!

      Miten Avancen osinkojen verotus? Aiheuttaako Bermuda ongelmia suomalaisen verotuksen kanssa?

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    3. Moi

      Ei ole vielä osinkoja Avancesta tullut, mutta homma pitäisi toimia samoin kuin esim. Seadrillin kanssa, elikkä Avancen osinko verotetaan Suomessa ulkomaan ansiotulona. Ennakonpidätystä ei tehdä, vaan vero maksetaan myöhemmin lopullisen verotuksen valmistuttua.

      DH

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  2. preikestolen spainMarch 18, 2015 at 3:00 PM

    Hi, DH.
    I,m from spai, looking for diversify my dividend stocks portfolio.
    Could you recomend me some interesting stock for entering in this moment for buy and hold? From Norway, Sweden, Norge, Finland ?
    I,m close to make my first buy in Avance Gas in 119 nok. Recently entered in Marine Harvest?
    As I see You know very well Nordic Markets, I would like to ask your valuable pice of advise or point of view.
    Thanks.
    Preikestolen.
    Gracias, amigo.

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    Replies
    1. Hello preikestolen

      I really do not know well the Nordic market, but follow the course on a regular basis. In my view, Avance is a cheap and dividend in 2015 is going to be very good, in 2016, probably lower. If you believe the price of oil to rise, Norway can be found many interesting companies that pay a high dividend yield, but not necessarily annually increasing. Marine Harvest is also on my watching list.

      Thanks for stopping by!
      DH

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  3. Thanks, DH.
    I read your answer tonight. This morning I bought 200 AVANCE GAS in Nok 119,5 seing it in the 52w high-low the middle range.
    Last Friday I took 200 MARINE HARVEST maybe at high price 100,10 nok.

    What about Prosafe? It,s close to low 52weeks?

    I understand the petrol situation is a risk, but also I see that now is the good moment for entering sin some leading and specialized companies you have in Nordic Countries.

    Then Im interested in extending moderate positions on my portfolio (about 1-2%) in companies as Prosafe, Avance, msybe Telenor or Telia....
    ¿Whata about nordic mining?

    Also look for entering in NORFILS NICKEL Rusian but adr I see in my broker in xetra deutschland and in London stock but I dont find Norfilsk adr in OTR Usa... ( i doubt about chosing adr in xetra or london)

    I value a lot your words becouse your blog is a interesting reference and you have a close vision from Nordic countries so far from us in Spain.

    My id "Preikestolen" I took from my two trips in Norway driving along the fiords. Really Beautiful!!!!!

    Of course I passed also Finland: kautokeino, Laaperanta, Enontekio, Rovaniemi...

    I love these lands...

    The best regardings for You.
    All the success in your investments, financial freedom and Life.

    Salud.

    ReplyDelete
    Replies
    1. Hello Preikestolen

      Congratulations on good purchases!
      Of course, if you believe in offshore drilling to be good business for a few years, Prosafe is a good choice. The dividend yield is currently about 6%, but it is possible that there will be more cuts to dividends, if oil prices remain low.
      Telia gives a nice 6% dividend yield almost certainly in the future, but the prospects for growth are limited. Telenor same thing, but with a lower rate of return. Maybe you should also look Tele2. Nordic Mining's value may tomorrow be zero, double, triple ... a big risk, but also the opportunity...as gambling.
      I agree with you, the Norwegian fjords are really beautiful

      Thanks, same for you!
      Cheers,
      DH

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  4. What are your thoughts about the stock today? They are currently loosing money with the current rates. But the stock have also got a huge beating.

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    1. Hi Gustav

      You are correct, it seems, that this purchase of Avance was one big mistake! It was clear for me, that rates will go down, because more ships will come to the market, but it was surprising, that they went so much down! Now I will only wait and look what will happen in a year or two.

      Thanks for visiting!
      DH

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