Navigator Holdings: Macro Tailwinds And Quality Assets; Bull Thesis Intact

seekingalpha11-20

YTD Navigator realized 12.3% gains. Considering its fleet and the Houston Terminal, it is uniquely positioned.NVGS reported higher YoY revenue and EBITDA in 3Q24, with a $141 million revenue and $67 ...

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Considering its fleet and the Houston Terminal, it is uniquely positioned.NVGS reported higher YoY revenue and EBITDA in 3Q24, with a $141 million revenue and $67 ...</p>\n\n<a href=\"https://seekingalpha.com/article/4738869-navigator-holdings-macro-tailwinds-and-quality-assets-bull-thesis-intact\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Navigator Holdings: Macro Tailwinds And Quality Assets; Bull Thesis Intact</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNavigator Holdings: Macro Tailwinds And Quality Assets; Bull Thesis Intact\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-20 13:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4738869-navigator-holdings-macro-tailwinds-and-quality-assets-bull-thesis-intact><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>YTD Navigator realized 12.3% gains. Considering its fleet and the Houston Terminal, it is uniquely positioned.NVGS reported higher YoY revenue and EBITDA in 3Q24, with a $141 million revenue and $67 ...</p>\n\n<a href=\"https://seekingalpha.com/article/4738869-navigator-holdings-macro-tailwinds-and-quality-assets-bull-thesis-intact\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4144","symbol_name":"石油与天然气的储存和运输","start_time":0,"source_url":"https://seekingalpha.com/article/4738869-navigator-holdings-macro-tailwinds-and-quality-assets-bull-thesis-intact","article_id":"2484155443","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1517071015/image_1517071015.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2484155443","pubTimestamp":1732080600,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"YTD Navigator realized 12.3% gains. Considering its fleet and the Houston Terminal, it is uniquely positioned.NVGS reported higher YoY revenue and EBITDA in 3Q24, with a $141 million revenue and $67 m","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4144":"石油与天然气的储存和运输","NVGS":"Navigator Holdings Ltd."},"translate_title":"领航员控股：宏观顺风和优质资产；公牛论文完好无损","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NVGS":0.9},"content_text":"YTD Navigator realized 12.3% gains. Considering its fleet and the Houston Terminal, it is uniquely positioned.NVGS reported higher YoY revenue and EBITDA in 3Q24, with a $141 million revenue and $67 million EBITDA.NVGS restructured its balance sheet in 3Q24. Navigator's benefits are two-fold: lower cost of capital and pushing maturity forward five years.Navigator pays dividends and maintains a share repurchase program. The buyback yield is 5.09%. For the third quarter, NVGS declared a $0.05/share dividend. The LTM dividend yield is 1.24%.Navigator trades at 73% PNAV. In summary, I give NVGS a Strong Buy rating.   bfk92 Note: I previously covered Navigator Holdings (NYSE:NVGS) in September. I emphasized the company’s fleet qualities and shareholder policy. NVGS traded at 77% PNAV and 40% gross LTV. I gave the company a Strong Buy rating. I review NVGS 3Q24 earnings and the company’s rating in today's note. Introduction Navigator is still one of my favorite shipping stocks and my largest holding. Since my last note, its share price has performed well, especially compared to its peers. KoyfinYTD NVGS realized 12.3% gains. Considering its fleet and the Houston Terminal, NVGS is uniquely positioned. Fleet NVGS's first advantage is its fleet. The company is focused on Handy and Small LPG carriers, which have favorable fundamentals. Company's current fleet has 56 ships with an average age of 11.4 years. The mage below from the 3Q24 presentation shows the NVGS fleet. NVGS 3Q24 Navigator progressively updated its fleet. In 3Q24, it sold the 2000-built Navigator Orion, a 22,000 cbm LNG carrier, resulting in a net gain of $4.9 million. Orion is the fourth vessel that NVGS sold since January 2022. In August, NVGS announced a new order for two MGCs with 48,500 cbm capacity. Ships are scheduled to be delivered in 1Q27 and 2Q27. The average price per ship is $102.9 million. The company can order two additional ships with the same specifications with expected delivery in 2027/2028. The new ships will be fitted with dual-fuel engines for ethane and will be retrofit-ready for ammonia. For 3Q24, Navigator earned $29,079/day vs. $26,278/day for 3Q23. Fleet utilization declined from 93.4% to 90.9% over the same period. Navigator reported $8,437/day fleetwide OPEX and $20,930/day break even for 3Q24. Navigator has a busy drydock schedule. The company completed 12 dry docks in the first nine months of 2024, and 12 vessels are planned for drydocking in 2025. NVGS uses the drydocks to upgrade its fleet with anti-fouling paint, propeller upgrades, and route optimizations. The goal is to improve efficiency, thus reducing air emissions and fuel costs. The other reason I like NVGS is its ownership of the Houston Ethylene Terminal. Hurricane Beryl impacted 3Q24 throughput. Ethylene Export Terminal throughput volumes at Morgan’s Point were 121,634 tons for 3Q24 compared to 249,857 tons for 3Q23. The terminal's expansion is in progress and expected to be completed in late December 2024. Navigator’s share of expansion CAPEX is $130 million. The company already paid $67 million in October, and the following payment is planned for November. Navigator intends to use its cash reserves to cover the payments. 3Q24 results In 3Q24, Navigator realized higher revenue and EBITDA compared to 3Q23. The image below shows 3Q24 financial highlights. KoyfinFor 3Q24, Navigator reported $141 million in revenue and $67 million in EBITDA. The company reported $43.6 million in operating expenses vs. $39.5 million in 3Q23. The operating expenses were higher due to an increased fleet size and more vessels planned for drydocking. Navigator reported a $18.2 million net income and $0.26 diluted EPS. Net income dropped by 4.7%. On the other hand, EPS remains the same. The company’s buybacks compensated for the declining net profits, hence EPS remained unchanged YoY. As of November 07, NVGS reported $118 million in cash and $805 million in total debt. The company’s Total Debt to Equity is 65.1%. For 3Q24, the company declared $48.5 million operating cash flow and $39.2 million operating income. Gross interest expenses for the same period were $19.4 million. NVGS restructured its balance sheet in 3Q24. The company secured a $147.6 million senior secured term loan in August. The proceeds were used to repay the secured loan, which matures in March 2025. Navigator issued $100 million of senior unsecured bonds on the Nordic Bond Market in October with a 7.25% fixed coupon. The proceeds will be used to repay $100 senior unsecured bonds with an 8.0% coupon that mature in September 2025. Navigator's benefits are two-fold: lower cost of capital and pushing maturity forward five years. The image below shows the current and pro forma debt repayment schedule. NVGS 3Q24 presentationThe new amortization schedule gives NVGS time to invest in fleet upgrades and Houston Terminal expansion. Moreover, the company will have spare liquidity for dividends and buybacks. During 2024, NVGS repurchased 311,191 shares for $5.1 million (an average price of $16.47/share). The LTM buyback yield is 5.09%. For the third quarter, NVGS declared a $0.05/share dividend. The LTM dividend yield is 1.24%. Buybacks and dividends combined are about 25% of the company’s net income. That said, buybacks and dividends are well covered. NVGS is focused on growth. At that stage of the company’s life, I prefer buybacks. The company kills two birds with one stone: first, it reduces the number of shares; second if all else is equal, it increases dividend yields. Valuation Navigator is attractively valued against its peers. KoyfinThe company trades at 3.7 EV/Sales and 5.9 EV/EBITDA. All figures are NTM. Mr. Market prizes more Avance Gas (OTCPK:AVACF) and Dorian LPG (LPG). Avance is a strong proposition, considering its attractive dividend yield. Dorian also offers a double-digit dividend yield. However, in recent months, the company has diluted its shareholders massively. Only two companies in the group are focused on the Small/Handy segment: StealthGas (GASS) and Navigator. GASS is the cheapest of them because the market discounts its management qualities. Let’s see how NVGS trades based on NAV. To estimate its NAV, I use the following inputs:  Fleet replacement value: $2,200 million Current assets: $214 million Total Liabilities: $886 million Total Debt: $805 million Market Cap: $1,120 million Total Shares Outstanding: 69.5 million  Navigator trades at 73% PNAV, while GASS trades at 35% PNAV. In my opinion, the market underestimates NVGS's growth potential. Especially after the balance sheet restructuring, NVGS has the time and capital to invest in fleet upgrades and Houston Terminal. LPG carriers market  Unlike the tanker market, the LPG market is not attractive at first glance. The order book exceeds by a wide margin the number of vessels older than 20 years. In such cases, robust day rates depend on the higher tonne-mile demand growth rate than the fleet growth rate. In the long term, it is not sustainable. However, the devil is in the details. Navigator is positioned in a niche segment: Small and Handysize LPG carriers. The order book and age profile favor a bull thesis. The Handyzise order book (8.0%) is significantly lower than the percentage of ships >20 years old (21.6%). Small LPG carriers' fundamentals are also favorable. The demand for LPG freight is projected to grow significantly. Ammonia is a prime example. NVGS 3Q24 presentationIts role as a marine fuel is part of the equation. The projected growth suggests considerable tonne-mile demand growth, which is a long-term tailwind for LPG carriers. On the other hand, other factors have a more intense impact short to mid-term. One is politics. The political changes in the US are supportive of the LPG industry. Trump's campaign has emphasized the importance of growing energy production and export. Moreover, China will keep its pivotal role as a buyer of US LPG and NGL. Below is a quote from 3Q24 call transcript:  In addition to this, the Trump campaign has also focused on the need to -- for reducing the U.S. trade deficit with its trading partners, in particular China. We think that this will result in China buying more commodities from the U.S., including LPG, ethylene, ethane and eventually also clean ammonia. So all in all, an election outcome that will lead to strong demand for the energy infrastructure that Navigator delivers.  The US has already cemented itself as a leading LPG exporter. The Trump administration is pro-energy, so I expect the US to expand its LPG and NGL capacity. In summary, the LPG bull market is intact, and Small/Handysize carriers are well positioned to benefit. Risks The major risk for NVGS is softer day rates. The company has a $20,930/day breakeven, providing a margin of safety. However, a short-term market weakness can send the day rates to near $20,000/day, so NVGS may experience difficulties. That said, the company did a great job with its maturity schedule. Plus, it has adequate cash reserves. In the worst-case scenario, day rates < break even, Navigator has enough cash to cover its debt obligations for a few quarters. The NVGS fleet is relatively old, which means more unexpected breakdowns and scheduled maintenance, resulting in lower fleet utilization and rising operating expenses. Navigator is taking measures to upgrade its fleet. An improved age profile will reduce the operating risk. Investors Takeaway  Navigator is a shipping growth stock. However, it is not a speculative idea like StealthGass. NVGS offers valuable assets at a reasonable discount. The company’s shareholder's return policy is attractive, too. In summary, I give NVGS a Strong Buy rating.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2484155443"}