Capital Product Partners has more than doubled earnings with more ships on the water and forecasts longer charters amid Covid-19 uncertainty that may spur further asset buys.
The Jerry Kalogiratos-led owner of 13 boxships and one bulker posted a $7.8m profit for the third quarter, up from $3.4m a year ago.
The New York-listed company's earnings per share (EPS) came in at $0.41, beating analysts' estimates and year-ago EPS of $0.18.
Revenue improved by 34% to $35.5m as a result of buying three 10,000-teu ships in January, the company said.
The 2011-built vessels — Athos, Aristomenis and Athenian — were bought from sponsor company Capital Maritime & Trading for $163m.
The same month, the partnership signed two deals with Chinese leasing houses that added three CMA CGM-chartered containerships to its fleet and partly refinanced an existing loan.
Capital said it expects longer fixtures amid rising rates and is thus open to buying more 'dropdown' ships from its general partner as China's boxship demand continues.
'There are opportunities'
"I think that even in a market like the one we're seeing today, there are opportunities ... to offer longer term charters, then even if you pay a slightly higher price on an asset, but you have the visibility and you know your your return for the next three to five years, then there are transactions that are attractive today," chief executive Kalogiratos said on Monday during a call with analysts.
During the third quarter, Capital secured employment for 9,288-teu Adonis (built 2015) for 12 to 14 months at $33,500 per day, starting in late September 2020.
"As a result, the partnership’s charter coverage for the remainder of 2020 and for 2021 has increased to 91% and 86%, respectively while the remaining charter duration amounts to 4.5 years," Capital said
Capital's shares, which trade on the Nasdaq exchange under the ticker symbol CPLP, have slid 1% to $7.34 by late morning on Monday.
Things are hot and could not be much better for container shipping," Stifel analyst Ben Nolan wrote in a note.
"Consumer demand is strong and while it may not be permanent, for the time being, it has translated into full ship utilization with very limited fleet growth.
"Ship rates have already improved and now tenor is stretching."
Boxship rates on average reached $2,267 per day on 1 October before falling to $2,236 per day on 8 October, moving sideways to $2,233 per day on 30 October and then hitting $2,262 per day on Monday, according to Freightos.
