MPC Container Ships (MPCC) looks set to hand out big payments to shareholders following its fleet optimisation.
The Oslo-listed, German-controlled owner has bought five modern feeder vessels from Lomar Shipping, while selling one of its own ships and taking early redelivery of another.
Clarksons Securities analysts Frode Morkedal and Even Kolsgaard said: “The selling and redelivery initiatives appear to be positive because they materialise asset values and backlog at a time when the stock is trading significantly below net asset value.
“Furthermore, based on the current charter contracts, the new acquisitions should increase earnings and dividends.”
They expect large dividends over the next two years.
These should amount to about 45% of the company’s market cap, even if charter rates fall to around $9,000 per day, Morkedal and Kolsgaard calculate.
“The rate environment in 2025, when the majority of the backlog is completed, is an important consideration. We estimate a market cap of around $440m if 45% of the market cap has been paid out,” they said.
“These large dividends significantly reduce risk.”
Clarksons Securities views MPCC as providing significant downside protection, with a high potential upside for those bullish on the container ship market.
But the investment bank sees few short-term catalysts to significantly boost its valuation.
Not a ‘buy’ any more
As a result, it has downgraded the company to “neutral” from “buy”.
The 4,256-teu AS Emma (built 2010) has been sold for $22m. The analysts estimate proceeds at $15m.
It will continue under its current time charter contract with MSC Mediterranean Shipping Company at $20,000 per day until handover in November.
MPCC has renegotiated the early redelivery of the 3,586-teu AS Nadia (built 2007), together with cash compensation from Pasha Hawaii.
The vessel is also on charter to MSC at a rate of $20,000 per day.
“Although the exact amount of compensation is unknown, previous transactions repaying the present value of the Ebitda backlog indicate that it could be in the $32m range,” Morkedal and Kolsgaard said.
