MPC Container Ships (Buy, TP: NOK54.00) - Could set the floor at NAV
We have adjusted our forecasts for near-term headwinds into H1 2019 by lowering our rate outlook and utilisation and thus cutting our 2019e EBITDA by 29%. The shares are trading 27% below our NAV and we believe the company could close the valuation gap by selling ships and buying back shares. MPC is down by 44% YOY, whereas Maersk is down by 12% YOY. We calculate the sale of six vessels would be likely to generate enough cash to buy back c10% of its market cap as secondhand transactions average 17 per quarter and should be sufficient. We reiterate our BUY; our target price has been cut to NOK54 (60).
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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