Jefferies has raised its outlook on Danaos Corp after the boxship owner bought six secondhand boxships, bringing its fleet count to 71 vessels.
The John Coustas-led company announced on Wednesday that it acquired the 5,466-teu vessels for $260m with expectations that they will add $71m in revenue and $19.5m in annual Ebitda over two years.
Jefferies raised its 2022 earnings per share estimate to $20.03 from $17.43 as a result of the purchase, "with further upside likely" in 2023.
The investment bank expects Danaos' intermediate boxships to earn rates of $50,000 per day and its feeder ships to bring in $35,000 per day this year.
Next year, it foresees the intermediates earning $30,000 per day while the feeders get $25,000 per day.
The ships, which were built at Hanjin Subic Bay shipyard and have an average age of 6.8 years, come with below-market charters attached but are relatively young, analyst Randy Giveans said, echoing TradeWinds reporting on the deal.
"Based on the contracted revenues, we estimate the current charters average $18,500 per day, providing substantial rechartering upside in 2022-2024," he wrote in a clients' note.
He also said that these youngest in Danaos' fleet have "massive potential earnings upside" on much higher rates and plenty of residual value over the next two decades.
Jefferies also expects that Danaos will have $100m in cash after the buying spree, assuming that the owner will pay for half of ships with new debt.
Those Zim shares
Jefferies further notes that the company still owns 8.2m shares of Israeli liner operator Zim that will yield a $2-per-shareshare dividend in September and perhaps a $5 to $9 bonus in next year's first quarter.
"As a result, we believe Danaos will continue to pursue accretive acquisitions in the coming months," Jefferies wrote.
"With a robust balance sheet and very attractive valuations ... we believe Danaos shares offer a very compelling risk-reward opportunity."
Danaos announced on Thursday that it spent $86.7m in cash to buy the remaining 51% of Gemini Shipholdings, an owner of five post-panamax containerships.
