Choppy Near-Term Trends And LNG Order Uncertainty Hitting Chart Industries

With so much of Chart Industries' (GTLS) upside tied to unbooked orders for LNG capital equipment, I can understand why worries about pushed-out timelines for large LNG export facilities would be hitting the shares. On top of that, the outlook for midstream capex in 2020 isn't very good and the slowdown hitting many industrial end-markets is likely to lead to lower industrial gas orders. As LNG prices have recently hit multiyear lows, I suppose it's not so surprising that Chart shares are near a 52-week low and the shares are down more than 20% from the time of my last update.

While understandable, I'm not so sure this downturn is entirely reasonable. True, the LNG outlook has risk to it; orders could get delayed or disappear altogether under certain circumstances. But at this point, I think a lot of the LNG opportunity has been derisked; I can't say that Chart is trading just on the value of its industrial gas business, but it's pretty close - if the E&C business would grow only 2% from 2019 levels (with mid-single-digit growth from the D&S businesses), the shares would be around fair value in my model.

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Choppy Near-Term Trends And LNG Order Uncertainty Hitting Chart Industries