MPC Container Ships (MPCC) is set for more bumper earnings this year and in 2023 — and investors will benefit.
Clarksons Platou Securities said not only will shareholders get a cut of the operational profit in dividends, but the Oslo-listed German feeder ship specialist is lining up a huge one-off payout after banking big gains from vessel disposals.
The 11 ships sold in 2021 will lead to the special cash distribution in the first quarter, MPCC has said.
Net proceeds were $146m or NOK 2.90 ($0.33) per share after the vessels were sold in record markets for a combined $288m.
The 11 cost just $112m to acquire.
The latest ship to go is the 2,510-teu joint venture vessel AS Patricia (built 2006) for $34.3m, against a VesselsValue valuation of $33.2m.
The feeder unit was acquired for only $9.9m.
Frode Morkedal, managing director of equity research at Clarksons Platou, said regular dividends will be about NOK 1 per share in both the first and second quarters of 2022, rising to NOK 1.30 in each of the third and fourth periods.
He is predicting NOK 8.80 per share in shareholder returns over the coming year.
"With 2022 now looking more and more likely to offer another historically strong year for the container ship industry, we believe MPCC should have another year of opportunity to lock in their fleet with multi-year contracts," he added.
"This means that 2023 earnings could be at least as good as 2022 and there is a fair chance that the stock could close the gap to net asset value [NAV] as residual ship values are gradually cemented by a firm contract backlog."
MPCC has also announced seven new charters concluded since last November that demonstrate a continuously strong market, with forward fixtures being done at attractive rates and for solid periods.
Clarksons Platou has a "buy" rating on the stock with a target price of NOK 40, against NOK 30.35 in Oslo on Wednesday, up more than 8%.
Positive picture for tonne miles
The investment bank is upbeat on boxship prospects, with net fleet growth expected to slow from 5.2% in 2021 to 4% this year, reflecting fewer deliveries from yards.
Looking at tonne miles, Morkedal said growth was robust last year at 6.9%, driven mainly by strong US containerised imports.
"For 2022, we expect continued US import growth helping the market, reflecting a restocking need," he said.
"We expect 5.7% tonne-mile growth, higher than net fleet growth. Hence, only a reduction in inefficiencies would lead to a normalisation in rates this year, we argue."
New Covid-19 infections around the globe mean port congestion could stay elevated for longer than previously expected, according to Morkedal.
"Bottom line is that time-charter rates are expected to remain strong for another year," he said.
Clarksons Platou assesses MPCC's current NAV at NOK 47 per share, including the charter backlog.
"With another year of opportunity to lock in three-year charter contracts, we believe the stock market should be willing to price in more of the current NAV," Morkedal said.
"Combined with the elevated cash distributions (and potential share buybacks) we believe there is still a lot of upside potential in the shares."
