Cape market softness contrasts Ultra/Supra market firmness. Since 1Q2021 operating results were released in early May, the Baltic Cape Index (BCI) has dropped from 5,405 to 3,346 on June 11th, with a low of 3,089 on May 28th. The recent rebound, combined with FFA curves that indicate higher rates, is encouraging and we look for Cape rates to rebound in 2H2021. In contrast, the Baltic Supramax Index (BSI) has moved consistently up from 2,135 to 2,592 on June 11th, mainly due the higher degree of cargo diversity.Fine tuning 2021 EBITDA estimate of $183.9 million on TCE rate assumptions of $19.1k/day. Forward cover is higher in 2Q2021 versus 1Q2021 with 72% booked at $24.9k/day for Capes and 76% booked at $17.8k/day for Ultra/Supramaxes. Also, five time charters have been signed, which implies that visibility might improve over time.Our FY2022 dividend estimate remains $2.70/share, or a potential yield of ~15%. The dividend estimate is based on 2022 EBITDA estimate of $197.8 million and TCE rates of $19.8k/day. Variable dividend policy begins in 1Q2022 and scenarios look attractive. While the dividend is bound to fluctuate based on the previous quarterly results, the variable dividend policy is attractive.Financial leverage already moderating. Pro forma cash was $161 million on May 31st, down from $180 million on April 30th and $164 million on March 31st. Cash increased $17 million in April due to positive operating cash flow, but fell back due to acquisition deposits of $22 million and debt repayment of $20 million. As a result, net debt was close to $220 million on May 31st, which is down $17 million from $237 million in 1Q2021 and down $70 million from $270 million in 4Q2021.Maintaining OUTPERFORM rating and price target $25. The dry bulk market outlook remains favorable due to firming demand and low supply growth. We believe that the reception of the shift to a variable dividend policy is improving, and the fleet renewal program, upside Cape optionality, and higher public float are positives. While the stock has responded to firmer dry bulk market fundamentals and is up 151% this year, including 83% in 2Q2021, we view the current risk/reward profile and upside potential as attractive. Read More >>