Dorian LPG Ltd. – Value Analysis (NYSE:LPG) : November 20, 2017

Capitalcube gives Dorian LPG Ltd. a score of 34.

Our analysis is based on comparing Dorian LPG Ltd. with the following peers – Teekay LNG Partners L.P., Frontline Ltd., Scorpio Bulkers, Inc. and DryShips Inc. (TGP-US, FRO-US, SALT-US and DRYS-US).

Investment Outlook

Dorian LPG Ltd. has a fundamental score of 34 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It trades at a lower Price/Book multiple (0.44) than its peer median (0.68).
  • LPG-US‘s EBITDA-based price multiple implies around peer median future growth. The market seems to expect the company to maintain the peer median EBITDA-based return it currently generates.
  • LPG-US‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • LPG-US‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While LPG-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a Price/EBITDA ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company is likely overinvesting in a business with only median returns.
  • LPG-US seems too levered to raise additional debt.

Access our research and ratings on Dorian LPG Ltd.

Leverage & Liquidity

LPG-US would seem to have a hard time raising additional debt.

  • With debt at a relatively high 57.17% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 57.17%), and relatively tight interest coverage level of -0.01x, LPG-US would have a hard time raising much additional debt. The company has a Constrained profile in terms of its ability to take on further debt.
  • All 4 peers for the company have an outstanding debt balance.

LPG-US has maintained its Limited Flexibility profile from the recent year-end.

  • LPG-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 999x in 2016.
  • Compared to 2017, interest coverage has remained relatively stable for both the company (-0.01x) and the peer median (-0.01x).
  • LPG-US‘s debt-EV is greater than (but within one standard deviation of) its five-year average debt-EV of 53.98%.
  • Though its debt-EV has remained relatively stable at 57.17% compared to 2017, its peer median has decreased to 57.17% from 58.51% during this period.
  • Relative to peers, debt-EV rose 1.34 percentage points.

Access the detailed analysis for Dorian LPG Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Teekay LNG Partners L.P. 64.28 0.32 2.53 6.66
Frontline Ltd. 67.73 1.66 1.68 11.5
Scorpio Bulkers, Inc. 52.31 2.2 -0.91 0.8
DryShips Inc. -28.05 3.59 -4.52 -36.36
Dorian LPG Ltd. 57.17 0.56 -0.02 4.97
Peer Median 57.17 1.66 -0.02 4.97
Best In Class -28.05 3.59 2.53 11.5

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Company Profile

Dorian LPG Ltd. is a liquefied petroleum gas shipping company. It focuses on international transportation of liquid petroleum gas with large gas carriers. The company also offers in-house commercial and technical management service for all the vessels including vessels deployed in the Hepos Pool. Dorian LPG was founded on July 1, 2013 and is headquartered in Stamford, CT.

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