Investing In Natural Gas, Part 2
Robert Kientz | Aug 28, 2012 01:34PM ET
The company appeared to overbuild the oil fleet despite capacity issues, and continued to issue strong dividends while facing two straight years of losses. It finally suspended the dividend, but still needs to prune its fleet and shed excess debt to recover. Current management does not appear to be embracing an aggressive fleet realignment strategy, however, and investors should beware this stock, a cheap share price notwithstanding.
Gaslog (GLOG) is an international operator of 10 LNG carriers with eight more on the way. Most of the new fleet has already been contracted and demand should drive profits in the future. Gaslog’s fleet will be 1.9 average years old upon arrival of the new vessels, which will make it the youngest in the industry and among the most efficient to operate.
The company has a large finance payment due in Q1 of 2014 but should be able to refinance given current assets. 2012 profits are expected to be weak due to staffing increases for the coming new fleet. Profits are expected to rise in 2013 and 2014.
An earnings call is scheduled for August 21, which may impact the stock short term. But this story is a medium-term play. Once the company gets past its current financing challenges, annual earnings growth is full speed ahead.
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