I have tried to construct a balance sheet and P&L from Box Ships' (TEU) recent offering and the IPO document and put it in my container ship leasing discounted cash flow model.
The company is currently trading around book value but I don't think it should be for the following reasons:
- Margin to LIBOR: + 4%. This is very high for a company with low leverage.
- Lower than market rate TC of short duration.
- It is unclear what the operating expenses will be.
- Covenants don't appear too generous.
- Does not enjoy economies of scale compared to larger competitors.
On the positive side it appears that they will be paying high dividends though it is also not clear exactly how this will turn out.
My suggestion is to stay away until the first quarterly filling has been made and then reassess. There are plenty of attractive investments to make in other container ship chartering companies. Here I am thinking of Rickmers Maritime (OTC:RCKMF), Seaspan (SSW), Global Ship Lease (GSL), Costamare (CMRE), Danaos (DAC), in that order.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.