Oslo-listed feedership player MPC Container Ships (MPCC) could erase its net debt by 2023 in red-hot vessel charter markets.
That is the view of analysts at Clarksons Platou Securities, which was reacting to the company's second profit forecast rise this year.
On 11 April, MPCC revised its 2021 Ebitda guidance upwards to between $120m and $140m, from $90m to $110m in February.
This was due to the continued strong time-charter market where rates have reached their highest levels since 2008.
Clarksons Platou's Frode Morkedal, managing director of research, said: "Importantly, the average charter duration is said to be 20 months, which is a 10-year high.
Ships still scarce
"Because of continued strong charter-demand from liner companies, and due to the extended duration, the availability of open vessels for the next 12 months is now negligible," he added.
This means the market for chartering ships is likely to be maintained at a high level for longer than box freight rates, even assuming a likely normalisation to the liner market, Morkedal believes.
In turn, this should provide ample opportunity to book the remainder of the fleet at high levels at least through 2022.
Assuming these deals are booked at a similar level to average 2021 contracts, Morkedal estimates that net debt could reach zero by 2023.
"The strong balance sheet should in our view give MPCC good opportunities to create further values for shareholders," he added. MPCC revealed interest-bearing debt of $274m in November.
Stock price jumps
Clarksons Platou has reiterated a buy rating and a target price of NOK 15 per share, against a close of NOK 11.48 ($1.35) on Monday, up 11%.
MPCC has logged 25 new fixtures so far this year, with 37 vessels coming up for rebooking over the rest of 2021.
Four in five operating days for this year have been booked so far, up from the 68% level guided in February.
Next year is still relatively open at 27%, but MPCC should see coverage added during the second and third quarters, Clarksons Platou said.
MPCC did not guide on profit for the first quarter of this year, but Clarksons Platou is expecting Ebitda of $20m, up from $4m in the last three months of 2020.
The investment bank is forecasting Ebitda to average $37m over the final three quarters.
This is based on contract coverage and assuming open units are booked at prevailing two-year time charter levels.
Ships of 2,800 teu are attracting rates of $25,000 per day for two-year deals.
Tonnage providers are the best bet
"We believe tonnage providers like MPCC offer the best risk/reward bet in the containership value chain now," Morkedal said.
"There are too few ships available because of the strong volume growth and port bottlenecks, with more than 4% of the containership fleet idle in port queues."
And the analyst said that even if a normalisation happens in the second half of the year, the tightness in the supply chain is likely to linger on.
