GASS - Navigator Holdings: Bet On Rising Handysize LPG Carriers' Deficit

2024-04-05 12:11:23 ET

Summary

• NVGS ended 2023 with a 7.7% higher number of vessels. Meanwhile, the company improved its fleet utilization from 89% FY22 to 92.5% FY23.
• NVGS achieved solid operational cash flow growth of 33% in 2023. In 2023, NVGS repurchased shares for $48.7 million, resulting in a 4.35% TTM buyback yield.
• The company trades at higher multiples than its closest competitor, GASS (considering fleet specs, like vessel size and age).
• NVGS remains the second LPG stock in my portfolio. I increased the size of the position using the recent low volatility price action. I give NVGS a Buy rating.

Note: I previously covered Navigator Holdings ( NVGS ) in January 2024. In that note, I discussed the LPG carriers’ market, the company’s assets, and financials. NVGS caught my eye with its handysize-focused fleet and 50% ownership of the Houston Ethylene Terminal. The supply side for smaller LPG carriers is deeply constrained, considering the order book and the age profile.

On the other hand, the Houston Terminal is the largest Ethylene terminal in the world, and the US is projected to grow its ethylene exports further. NVGS scores a healthy balance sheet and strong margins, so it became my second pick in the LPG theme, along with StealthGas ( GASS )....

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