DonBboy

Norwegian pennystock Flex LNG (Natural gas transportation)

Long
OSL:FLNG   FLEX LNG LTD (BM)
Table of contents:
§ 1 About FLNG
§ 2 The market
§ 3 Why I am bullish
§ 4 The risks


§ 1
Flex LNG ( FLNG ) is a Norwegian company.
They specialize in transporting liquid natural gas around the world for heat, cooking etc.
They also create ships themselves, specially created within the CE regulations to ensure safe transport, as natural gas is highly flammable and explosive (who would have figured that one out...)
Now, FLNG has done something that might be incredibly smart or it might be incredibly stupid depending on which way things goes:
Most companies transporting gas and oil get a fixed rate on the transport, however FLNG has made it so they get paid based on the spot price of natural gas ( futures are called NG1! if you want to see the price)
This means if the price of natural gas goes up, so does their revenues, which also creates an interesting scenario for us as I will explain in more details in § 3.

§ 2
FLNG's market is mostly based in China and India (~2 billion people) which in latest years have used a lot of coal for heating, the problem with burning coal is that it's very harmful to the environment, it releases a lot of CO2 and last but not least it releases microscopic particles in the air increasing cases of astma and COPD (Chronic Obstructing Pulmonary Disease) which I don't have to tell you - is reall bad.
Now both China and India needs to move over to a more environmental friendly source of energy and heat, this is where natural gas comes in.
When you burn natural gas , you only get CO2 and water as a biproduct, which is still bad for global warming, but does not increase cases of COPD or astma.

§ 3
I am bullish when it comes to FLNG as I believe it will be ranging a lot based on time of year, as we can see when it comes to natural gas spot prices, this can make it a lot easier to predict price movements, as price has historically been highest in the winter (because it's cold and people need more heating, again, who would have figured...), and lower in the summer as very few people need heat in the summer.
I also think that because the market is so huge with at least 2 billion people I think there is a LOT of room for expansion.

§ 4
Although I believe this is an up and coming industry that will be huge the coming years, there is no guarantee that FLNG will be the leaders in the market, but seeing as Norway historically have been one of the leading ship builders and also leading within oil technology I strongly believe flex have a high potential. However, if it does not reach a 50-100% increase within February, it will likely not happen this year as spot prices will be on their way down again.
Another risk is market turbulence which might hurt FLNGs price.


To end it off with a little bit of my techincal analysis:
Price bounced from the 80NOK mark (~$10) where it has not been since it's true pennystock days where liquidity was scarce. Price was trending downwards after the winter just like NG prices have too. I believe the 80NOK level will hold because a lot of bigger institutions bought in at 120NOK and I believe they will either look to average down around the 80NOK mark to get their average to 100NOK to lower their overall downside.

And as we are smarter than the institutions (not really) I came up with an idea on how to spot more accurately when price is likely to explode (thank me later):
Look at weather forcast for the most populated areas in China and India, when temperatures start dropping it's probably time to buy either FLEX or NG futures .

Thank you all for reading and have a great rest of your day.
Trade active: Closed out roughly 50% of position in the 90-something.
Still in with 50% waiting for earnings report, and still bullish bias from our end.
Yet we are expecting price to spike on earnings, but perhaps roll over and go downwards from there as earning potential drops during summer months as natural gas transport is less needed for heating and the demand remains from mechanical production aswell as fuel.