Dry bulk market thesis intact due to favorable supply/demand fundamentals. The order book and supply growth remain historically low due to high rate volatility, regulatory uncertainty and declining capital availability, while demand is rebounding with global stimulus packages and solid secular trends in minor bulks. Despite the recent pullback, both BKI and BPI charter rates have been strong, especially in 2Q2021. As of last week, BKI charter rates moved up 108% to $24.8k/day and BPI charter rates moved up 122% to $23.5k/day. BKI charter rates averaged $18.5k/day in 1Q2021 and $23.7k/day in 2Q2021 to date, while BPI charter rates averaged $17.2k/day in 1Q2021 and $22.3k/day in 2Q2021 to date.No change in 2021 EBITDA estimate. Last revision included the acquisition, new charters and index rate adjustments. Our last revision to EBITDA included the positive impact of new charters, the Blessed Luck addition and higher TCE rate estimates so we are maintaining our 2021 EBITDA at $29.9 million based on TCE rates of $20.2k/day.Introducing 2022 EBITDA estimate of $37.7 million based on TCE rates of $21.9k/day. Since the Blessed Luck has a minimum of 120 days days fixed at $19.5k/day in 2022, there is no other forward cover at fixed rates so visibility is low. All of the other seven vessels are working on short charters or longer charters with indexed rates. While visibility is low, operating leverage is very high; each $1.0k/day change in the BKI/BPI/BSI indices and GMax pool impacting cash flow by +/- $2.6 million, or $1.10/share.Latest acquisition increases financial leverage, but strong cash flow should improve capital structure. The Blessed Luck, a 2004-built Panamax, will be acquired shortly for $12.1 million. While almost all of the latest acquisition will be bridge financed with debt of $11.0 million, we believe that longer term financing should be finalized in 3Q2021 and higher operating cash flow should improve the capital structure over the next two years.Maintaining Outperform rating and increasing price target to $35/share from $23/share to reflect firm dry bulk market fundamentals. Recent stock price performance has been positive in response to the strongest dry bulk market fundamentals in ten years. Even though the stock is up 401% this year, including a 50% gain last week, we believe that the risk/reward profile remains attractive based on firm dry bulk market fundamentals. Read More >>