ESEA - Euroseas (ESEA) - Webinar Highlights Strong Market and High Forward Cover
Container outlook remains strong. In a webinar hosted by Capital Link, CEO Aristides Pittas and CFO Tasos Aslides highlighted positive macro and micro trends. The macro outlook for the container market looks solid based on firm demand and upcoming emission regulations despite the high order book. Recent and upcoming fixtures at high TCE rates create high visibility into next year, and, absent acquisitions, shareholder friendly moves are highly probable with a stock buy back particularly attractive at the current stock price.Fine tuning our 2021 EBITDA estimate to $55.5 million from $53.9 million based on TCE rates of $18.7k/day, up from $18.6k/day. Higher fixture assumptions have positive impact on 2022 EBITDA estimate. We are moving our 2022 EBITDA estimate to $114.8 million from $109.4 million based on TCE rates of $29.4k/day, up from $28.5k/day.Forward 2022 cover of 91% at average TCE rates of $28.1k/day creates visibility. While the two recent fixtures pushed 2022 forward cover to a very high level of 91%, there are still a couple of opportunities to move the fleet to TCE rates that are closer to market rates. At an average TCE rate of $30.3k/day, the time charters represent a solid base of EBITDA of $102.3 million.Acquisition financing increases financial leverage, but high forward cover matches debt load. YE2021 cash was higher than expected and well positioned to buy back stock and/or pay dividends in the absence of acquisitions.Maintain Outperform rating and price target of $45.00/share. The sharp 4Q2021 drop after the slight miss on 3Q2021 operating results was surprising and even though the stock has rebounded slightly, we believe that the risk/reward profile is very attractive. Our container market outlook stays positive and numerous longer term charters at favorable rates create high forward cash flow visibility into this year and next. Recent acquisitions derisked with long time charters, improved forward visibility and the current valuation support a positive outlook. Favorable container market fundamentals, new time charters and two acquisitions are very positive, and shareholder-friendly moves, including stock buy backs and/or dividends, are highly probable this year. Read More >>