BW LPG Limited

BW LPG Limited (NYSE: BWLP), headquartered in Singapore, is a leading owner and operator of liquefied petroleum gas (LPG) vessels. The company manages a fleet of Very Large Gas Carriers (VLGCs) with a combined capacity exceeding three million cubic meters. Its operations span LPG shipping, product-related services, and infrastructure support. BW LPG’s fleet features VLGCs equipped with LPG dual-fuel propulsion systems, and it offers end-to-end LPG transportation solutions to its global customer base.

As per our previous Dividend Income Report published on ‘BWLP’ on May 28, 2025, Kalkine provided an ‘Buy’ stance on the stock at USD 10.69 based on fundamental analysis and the stock price has now moved by ~ 15.06% since then and is hovering around resistance 2.

Noted below are the details of support and resistance levels provided in our previous report:

Rationale – Sell at USD 12.30

• Product Services Drag Down Overall Profitability: While BW LPG’s core shipping operations remained profitable in Q1 2025, its Product Services segment weighed on overall results. Despite posting US$33 million in realised gains from delivered cargos, the business suffered a negative mark-to-market change of US$36 million on open cargo and paper positions. This resulted in a gross trading loss of US$4 million. After incorporating operating expenses, the segment reported a net loss after tax of US$12.5 million. This highlights the volatility and risk exposure inherent in BW LPG's trading activities, which contrasts with the more stable income from its shipping division.
• Strategic Pullback from Infrastructure Investments: BW LPG has decided to cease its investment in the LPG onshore import terminal at Jawaharlal Nehru Port Association (JNPA) in Navi Mumbai. This exit indicates a strategic retreat from infrastructure development amid growing global market uncertainties. While the company cited a renewed focus on core shipping and trading operations, the withdrawal also suggests challenges in scaling its presence in emerging markets. This decision may limit long-term diversification and growth opportunities in infrastructure-linked revenues.
• Unrealised Exposure and Hedging Gaps: Although BW LPG has secured 28% of its 2025 available days through fixed rate time charters and hedged an additional 2% via Forward Freight Agreements, the majority of its fleet remains exposed to volatile spot market rates. Given the unpredictable impact of geopolitical tensions—such as the recent US-China trade disruptions—this exposure may adversely affect earnings stability in upcoming quarters. The limited hedge coverage reflects a potential vulnerability to market downturns and rate shocks.
• Market Volatility and Trade Disruptions: The LPG shipping market is currently navigating turbulent conditions, with geopolitical events—most notably the US-China trade war—causing fluctuations in freight rates and shipping economics. Although the benchmark US-Far East route maintained a respectable average of US$32,000/day during Q1, future earnings are uncertain. Changes in OPEC+ production policies and potential redirection of vessels due to Panama Canal congestion could further strain logistics and profitability. These macro risks continue to inject volatility into BW LPG's operational outlook.

Valuation (Using P/E Multiple)

Share Price Chart  

Conclusion

BWLP faced several headwinds in Q1 2025, with its Product Services segment posting a net loss due to adverse mark-to-market movements, weighing on overall profitability. The company’s withdrawal from its planned infrastructure project in India signals a retreat from diversification amid global uncertainties. Additionally, limited hedge coverage leaves a large portion of its fleet exposed to volatile spot markets, while ongoing geopolitical tensions and trade disruptions create further unpredictability in earnings. With an ageing fleet and a growing global orderbook, BW LPG may face rising competitive pressure and efficiency challenges ahead.

Based on the notional gains, valuation downside and price action stance, a "Sell" recommendation on BW LPG Limited (NYSE: BWLP) has been given at the current market price of USD 12.30 as on 18 June 2025 at 08:30 AM PDT.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 18 June 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.