New York-listed owner Costamare Inc has drawn a ratings downgrade from investment bank Jefferies for its growing exposure to the dry bulk trade from its roots in the container ship sector.
Jefferies shipping analyst Omar Nokta took the Greek company to a “hold” from “buy” in a new client note that previews first-quarter earnings season for the 24 maritime companies under his coverage
Jefferies also reduced Costamare’s price target to $10 from $15. The share was trading at $9.35, down about 1.6%, in midday trading on the New York Stock Exchange.
As TradeWinds has reported, Costamare has been ramping up its presence in the dry bulk trade in two distinct ways.
The company has built up an owned bulker fleet to 43 vessels, still shy of its stable of 71 container ships.
But the Greek outfit also has been building scale in the private Costamare Bulkers platform it launched late last year to charter in tonnage.
When Costamare Inc reported financial results on 8 February, it revealed that Costamare Bulkers had agreed to fix 23 vessels.
By earlier this month, the fleet has swollen to at least 42 ships, according to Costamare Inc’s annual report. Twenty four of those bulkers already had been delivered.
The 42 vessels it chartered in have a total carrying capacity of approximately 6.46m dwt. This converts to an average of about 153,800 dwt per vessel.
The Costamare Inc fleet focuses on smaller handysizes, supramaxes and ultramaxes and includes just eight kamsarmaxes or panamaxes.
Costamare Inc owns 92.5% of the venture, has invested $100m in it and has agreed to spend up to $100m “under certain conditions”.
Looking at the two sectors in which Costamare operates, Jefferies expects container ship lessors like Costamare to be “in better shape” than liner companies such as Israeli outfit Zim when the numbers are reported in coming weeks.
“Liners have slowed vessel speeds, reduced services and blank-sailed capacity in response to low freight rates, with limited success thus far,” Jefferies commented.
Nokta expects “soft” results in the dry bulk sector for the quarter, with “cautiously optimistic commentary” from management teams about the back half of 2023.
“Seaborne cargo volumes across all segments were softer in 1Q versus 4Q due to seasonality, but the coal trade could remain subdued due to lower natural gas and coal prices while minor bulks are at risk due to softer global economic growth,” Nokta wrote.
“The iron ore trade has been positive as Chinese steel production has risen significantly in recent months, but softer spot steel prices recently point to lower iron ore volumes ahead.”
