Musing on BWLP (2025)

Investment Analysis Clubs Hohum's RollerCoaster Ride
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In mid September 2025, I trimmed my BW LPG (BWLP) stake. Wasn’t major - slightly over 8%. The reasoning then, BWLP was trending towards its 52-week high, and was already trading ex-div (Q2 payout). I didn’t have major concerns. I just thought it was odd for shares to be making new highs after the div had been paid. Fast forward, two weeks later. Shares have pulled back. More than 12% in a short interval. Added half of my Sept BWLP disposal shares back @ 13% discount.

This time last year, BWLP was trading around $16.50/sh, and currently trading under $14. Has something changed? Well, yes. In Q3 2024, BW LPG had announced a significant acquisition - acquiring the existing 12-vessel fleet of Avance Gas. The deal was a combination of cash, BWLP shares and assumption of debt. The vessels transferred on a staggered basis through the end of 2024.

Smaller developments.

  • The company’s major shareholder provided a loan to get the deal over the hump. That loan has since been replaced by a bank loan.
  • BWLP had purchase options on a couple of charter-in vessels. The company opted to exercise each option.
  • BWLP’s 52% owned subsidiary (BW LPG (India)) sold an older vessel for a decent profit
  • BWLP’s 52% owned subsidiary (BW LPG (India)) acquired two Chinese built VLGCs from BWLP parent.
  • The same subsidiary recently announced the sale of another older VLGC.

To summarize, BW LPG not only has a larger owned fleet, but overall, the fleet is also younger. The BWLP subsidiary also has a younger fleet than last year. There is a cost to that - BWLP has more debt due to the acquisitions. Since BW LPG have a tie-in between debt level and payout %, it is likely that the dividend amount is impacted in the short term.

That said, if I model for a 25c/sh quarterly payout, it works out to a $1 annual payout. That works out to a yield > 7% (Based on BWLP current share price). Added item, the LPG shipping sector is in its stronger half. For US exports, there is also more vessels getting routed via Cape of Good Hope (South Africa), which adds to travel time

Risks: BWLP and its subsidiary now own 8 Chinese built VLGCs. Will Trump’s tariffs have impact on Chinese built vessels? In BWLP’s case, the workaround could be to keep the Chinese built vessels plying non-US routes. Further down the road, in 2026, both the company, and the BW LPG subsidiary, have a lot less time-charter coverage.

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Have perused that report a few times. I think I had seen that stat, but but not paid as much attention to it. “That stat” is tucked away in Slide 13 and indicates Q3 2025 guidance @ ~$53,000 with 90% done. Even with zero charter for the remainder of Q3, the TCE will be better than Q2 2025.

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10/07

A week into Oct 2025, and still musing on BWLP. Figured I had done well with a 12% discount, so I repurchased enough to rebuild my BWLP stake in Roth ac. Then today say a sell-off among shipping names, including with BWLP. So, I purchased more BWLP in my taxable ac. There’s actually a plan in mind with today’s share purchase, and possibly the next couple of (potential) purchases that follow. As my oldest BWLP shares are my highest cost shares, I will likely use the new BWLP shares as a cost basis reset on any future BWLP price bounce above $15.75