MPC Container Ships (Buy, TP: NOK24.4) - Market outlook has caught up

Ahead of the Q3 results, due prior to market open on 18 November, we have updated our near-term charter-employment forecasts to account for more forward fixings as congestion endures. Hence, we have lifted our 2022–2023e EBITDA by 9–13% and find the current valuation at a steep disconnect to underlying asset values, while seeing potential upside to our forecast EBITDA contributions from vessels rolling off charters. We have upgraded to BUY (HOLD), but lowered our target price to NOK24.4 (27.0).

MPC Container Ships (Hold, TP: NOK27.00) - HOLD your horses

The freight market cycle extension, which in our view previously relied on faith, is in fact materialising with congestion again taking a turn for the worse, likely elevating rates even further before the inevitable decline at some point in the future. As we are approaching meaningful potential for contract renewals, we find the risk/reward increasingly reasonable. We have upgraded our recommendation to HOLD (SELL) with a target price of NOK27 (23) as we now see increased visibility on near-term...

After the crescendo

According to MPCC and in line with our estimates, the company has fixed more than 40% of its 2022 days which, adjusted for our estimated incremental contractual coverage, yields our 2022e EBITDA of USD304m, roughly in line with consensus. Should congestion remain, we estimate current TCE freight market rates would correspond to an EBITDA above USD400m for 2022e and more than USD500m for 2023e. However, we downgrade to SELL and lift our target price to NOK23 (16.7) as we see peak nearing

MPC Container Ships (Hold, TP: NOK16.70) - Agrees to buy Songa Contain...

MPC Container Ships (MPCC) is set to add 11 feeder vessels to its fleet in a cash/share deal after agreeing to acquire Songa Container AS for USD210m. The deal would add further operating leverage in a buoyant container market at an attractive price, in our view. Adjusted for the acquisition, the implied 2021 EBITDA guidance mid-point was lifted in line with our estimate, with still-significant potential for 2022–2023e at current freight rates. A webcast is scheduled at 10:00 CEST.

Financing 2°C Shipping - Financial risk of future regulations

We have worked with KLP and other partners in the Green Shipping Programme to assess the risk for financial stakeholders in various shipping technologies within the VLCC, Capesize and 10k TEU container segments. We find: 1) relative attractiveness of short-dated assets with scrubbers; 2) high uncertainty among newbuild alternatives in an uncertain regulatory environment; 3) that current IMO targets seem within reach in our base case; and 4) that further tightening of regulations is needed to ali...

MPC Container Ships (Hold, TP: NOK16.70) - 2022e EBITDA to surpass 202...

In our view, MPCC’s announced charter coverage illustrates an impressive increase in durations and freight rate levels. Consequently, we have raised our 2022e EBITDA to USD173m, well above our estimate of USD154m in 2021, due to our expectation of MPCC booking attractive charters for its remaining vessels that go off contract in 2021 (excluding pool vessels). However, we find the stock fairly valued and thus reiterate our HOLD but have lifted our target price to NOK16.7 (14.9).

MPC Container Ships (Hold, TP: NOK14.90) - HOLD as peak cycle nears

Ahead of the Q1 report, we have raised our 2021–2022e EBITDA by an average of 34% following MPCC’s recent fleet employment guidance and higher TCE freight rate estimates (results due prior to market open on 20 May). In our view, converging asset values and timecharter rates should set up asset values for near-term appreciation. However, we find it prudent to include a discount as we see peak valuation nearing and thus have downgraded to HOLD (BUY) but have raised our target price to NOK14.9 (8.2...

DNB Markets Shipping Conference: Decarbonisation takes centre stage

DNB’s 14th annual Energy & Shipping Conference culminated in yesterday’s shipping day. The main theme was decarbonisation of shipping, and its market impact today. Attendees included representatives from IMO and Trafigura, along with several shipping companies taking action towards ambitious decarbonisation targets. Also, the crude tanker and LPG panels both proved rather optimistic despite recent market lows.

MPC Container Ships (Buy, TP: NOK8.20) - 2021e looking solid

Following the Q4 report, we have updated our estimates to account for MPCC’s fleet employment and our near-term charter rate expectations. Our 2021e EBITDA is up 25%, to USD110m, which is above consensus (USD100m) and the mid-point of MPCC’s guidance (USD105m). We expect the recent decoupling between soaring time-charter rates and asset values to abate and thus reiterate our BUY and raise our target price to NOK8.2 (7.4). Our target price is in line with our one-year forward NAV, reflecting a 10...

MPC Container Ships (Buy, TP: NOK7.40) - Fleet employment in focus

Feeder TCE rates are being quoted at USD13.7k/day, a recent high, driven by vessel shortages, supply disruptions and a shift in consumer behaviour. Ahead of the Q4 results, due prior to market open on 26 February, we reiterate our BUY and have lifted our target price to NOK7.4 (5.9), but remain cautious about extrapolating the current market strength too far into 2021.

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MPC Container Ships (Buy, TP: NOK5.90) - Set to reap the benefits

MPC expects 40 vessels to renew their charter hires by end-Q2 2021, with the majority tilted towards the larger segments. On our estimates, however, we expect a 2021e EBITDA of USD79m, rising to USD107m if using current timecharter rates in Q2–Q4 2021e, illustrating the company’s operational leverage. We reiterate our BUY and have raised our target price to NOK5.9 (5.2), removing our discount as we see asset values closing the gap to timecharter rates.

Container Sector (DNB Markets) - Shifting power balance

H2 2020 has seen box rates rally in the aftermath of Covid-19 and surprisingly strong demand soak up available containership capacity. This initially favoured the liners, with astonishing margins in Q3, and more recently – as rates have continued to climb – also the timecharter markets. We are reluctant to extrapolate recent strength too far into 2021 and believe the tables could be about to turn for the liners, while non-operating owners such as MPC are well positioned to secure strong charters...

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MPC Container Ships (Buy, TP: NOK3.80) - Attractive risk/reward

The recent recapitalisation has in our view provided MPC with an adequate liquidity runway throughout 2021e and should thus see investors looking beyond 2020e. The container market’s recent turnaround indicates to us the trough could be shorter than expected and we thus see upside potential to our 2021 estimates. We reiterate our BUY and have raised our target price to NOK3.8 (3.5).

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MPC Container Ships (Buy, TP: NOK3.50) - Ready for a rebound

Trade war tensions since 2018 and the Covid-19 outbreak in 2020 have weighed on the feeder market, inflating idling to >10% and hurting rates and asset values. However, previous troughs have been followed by 18-month upcycles, lifting asset values by 100%+; we believe the next cycle is in the making. We like MPC Container Ships’ (MPCC) cash buffer post-equity raise, and believe too much negativity is priced in. We have cut our current NAV/share by 75% post-issue, and our target price to NOK3.5...

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MPC Container Ships (Hold, TP: NOK8.00) - Rates around cash break-even

As of end-Q1, MPC’s equity ratio stood at 57% with available liquidity of USD52m. For the rest of 2020, we estimate an average TCE rate adjusted for utilisation of USD7.6k/day, slightly above MPC’s reported Q1 cash breakeven (excluding recurring capex and financing) of USD6.6k/day, but below our estimated cash breakeven for Q1 (excluding non-recurring capex and based on ownership days) of USD7.7k/day. We reiterate our HOLD but have cut our target price to NOK8 (NOK10).

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