ESEA - Euroseas (ESEA) - Attractive Acquisition and Watching Upcoming Charters

Intermediate acquisition enhances fleet and adds to forward cover. The acquisition of a 2005-built 6,350 TEU container ship (TBN Marcos V) for $40 million should close in late 4Q2021. A three-year time charter at $42.2k/day, which equates to annual EBITDA of $15 million, derisks the acquisition. We expect debt financing of $24.0 million to be announced by yearend.Results out next week. 3Q2021 Numbers will be out BMO on November 16th and management will host a call at 10am EST. Number is (877) 553-9962 and code is Euroseas. Our 3Q2021 EBITDA estimate is $13.8 million based on TCE rates of $19.1k/day. In addition to container market comments, we will be looking for details on the latest acquisitions and the contract status on the intermediate and four feeders that are available for charter in 1H2022.Updating 2021 EBITDA estimate. Fine tuning our 2021 EBITDA estimate to $55.0 million based on TCE rates of $18.6k/day to reflect a new short term charter on the Corfu that positions it for dry docking and the Oakland rolling onto a charter at $202k/day.Updating 2022 EBITDA estimate and forward cover. Due to the time charter on the Marcos V, we are moving our 2022 EBITDA estimate to $105.0 million based on TCE rates of $28.2k/day. Forward cover is high and we estimate that 73% of 2022 available days are booked at an average TCE rate of $23.0k/day. Maintain Outperform rating and increasing price target of $45.00/share. Our container market outlook stays positive and numerous longer term charters at higher rates create forward 2022 cash flow visibility. Even though the stock is up 581% this year and close to a multi-year high, recent acquisitions derisked with time charters, improved visibility and the current valuation support a positive outlook. Favorable container market fundamentals, new time charters and two acquisitions are positive, and shareholder-friendly moves are likely later this year. Read More >>