AVACF - Avance Gas Holding: When An Excellent Fleet And Robust Balance Sheet Are Not Enough

2024-02-22 17:27:14 ET

Summary

• Avance Gas Holdings owns 12 VLGCs at an average age of 4.7 years. The company expects delivery of four new MGCs in 2025 and 2026.
• The company has $131 million cash, $454 million long-term debt, and $524 total debt (including lease agreements). The company’s capital structure is 81.6% Total Debt/Equity and 47.7% Total Liabilities/Total Assets.
• AVACF scores 66.2% Gross Profit Margin, 64.3% EBITDA margin, and 27.09% Return on Equity. Avance pays dividends with attractive yields at 18.5%.
• In my opinion, we are in the late stage of the VLGC expansion cycle, considering the high order book figures. I prefer to park my cash in LPG companies that own small and handysize LPG carriers.

Introduction

Avance Gas Holding ( AVACF ) owns and operates LPG carriers. The company has 12 VLGCs at an average age of 4.7 years. Six of them have scrubbers, and four are equipped with dual-fuel engines. AVACF expects delivery of four MGS in 2025 and 2026. Considering its young fleet, the company has an impressive balance sheet, with 81.6% total debt to equity and 47.7% total liabilities to total assets. Besides that, AVACF delivers strong margins and pays dividends with attractive yields....

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