Golar LNG Limited

GLNG Details

Golar LNG Limited (NASDAQ: GLNG) is an independent owner and operator of marine Liquefied Natural Gas (LNG) infrastructure for liquefaction, transportation, regasification, and downstream commercialization. It buys, owns, operates, and charters LNG carriers, Floating Liquefied Naturel Gas (FLNG) vessels, Floating Storage Regasification Units (FSRUs), and manages external containers under third-party management contracts. GLNG has ten LNG carriers, one FSRU, and two FLNGs in its fleet as of April 16, 2021.

Series of New Financings: On September 30, 2021, GLNG announced its plans to organize a series of fixed income investor calls beginning October 04, 2021. It also plans to issue a 4-year senior unsecured bond (USD denominated), proceeds from which will be used to refinance its outstanding convertible bonds due February 2022 and for general corporate purposes. In addition, the company stated that it has secured (subject to documentation) a 3-year secured revolving credit facility of up to USD 200 million and a 5-year refinancing facility of up to USD 182 million.

H1FY21 Results: The company reported a slight increase of 2.36% in total operating revenues to USD 230.11 million in H1FY21 (ended June 30, 2021) compared to USD 224.80 million in H1FY20. Net income increased to USD 570.44 million, compared to a net loss of USD 214.68 million in H1FY20. As of June 30, 2021, the company had cash and cash equivalents (including investments in listed equity securities) of USD 867.91 million, with a total debt of USD 2.38 billion.

Key Risks: The work associated with FLNG conversions is intensely technical and is generally undertaken by a small number of contractors with the necessary skills. Hence, switching contractors for any reason can lead to increased expenses and significant delays in the delivery schedules, thereby affecting the company's financials. Moreover, GLNG operates in various countries such as Cameroon, making its existing and prospective future projects susceptible to political and security risks.

Outlook: In H2FY21, GLNG plans to refinance its convertible bond and fund its FLNG growth ambitions using its existing cash balance and funds available in its bank finance facilities. It also expects to witness robust growth in earnings from New Fortress Energy, Inc. (NFE), in which it holds an 8.9% stake while working with NFE towards industrializing its FLNG concept. Going forward, the company also stated that it has re-commenced attempts to segregate its shipping and FLNG divisions.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

GLNG Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: GLNG's share price surged 9.78% in the past month and is currently leaning towards the higher end of the 52-week range of USD 6.88 to USD 15.12. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 60.53. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 14.03. Considering the company's refinancing initiatives, decent financials, encouraging outlook, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 12.80, down 2.59% as of October 06, 2021, 11:24 AM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.