Tuesday, September 22, 2020

Euroseas Ltd. (ESEA)

Higher Rates on New Charter and Scrapping Announced

Euroseas Ltd. provides ocean-going transportation services worldwide. The company owns and operates containerships that transport dry and refrigerated containerized cargoes, including manufactured products and perishables; and drybulk carriers that transport iron ore, coal, grains, bauxite, phosphate, and fertilizers. As of March 31, 2017, it had a fleet of seven containerships; and six drybulk carriers, including three Panamax drybulk carriers, one Handymax drybulk carrier, one Kamsarmax drybulk carrier, and one Ultramax drybulk carrier. The company was founded in 2005 and is based in Maroussi, Greece.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

New container contracts improve late 2020 outlook and extend into next year. Two intermediate feeders have been contracted at higher-than-expected charter rates. The Akinada Bridge was extended for a minimum of 12 months (and maximum of 13 months) at $17,250/day. The charterer was granted an option to extend for an additional 10-12 months at $20,000/day. In addition, the Synergy Oakland was extended for an additional 8-12 months through the exercise of an option. The rate is based on the CONTEX-4,250 index minus 10% (the index adjusts twice weekly, but the rate will be adjusted every three months). The new fixture will begin on October 23rd, and the current CONTEX-4,250 index is $15,369.

Adjusting 2020 EBITDA estimate to reflect new contracts and scrapping of an older feeder.  To reflect the positive 2Q2020 variance and current container market fundamentals, we are forecasting 2020 EBITDA of $13.7 million based on TCE rates of $9,240/day and operating days of 5,941, up from our previous estimate of $13.1 million based on TCE rates of $9,220/day. Also, the retirement of the Ninos ...

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.