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Surging Containership Rates: MPC Containers Update (Podcast Transcript)

Summary

  • Value Investor's Edge Live continues with this latest episode focused on the small-sized containership segment of the shipping industry.
  • MPC Containers is one of the largest publicly-traded containership companies by vessel count.
  • MPCC is considering a US listing later in the year and will be initiating a dividend policy during 2020. Their thoughts are very relevant for other US-listed peers.
  • We interviewed MPCC CEO Constantin Baack in early February to review the containership markets and to learn more about their strategy.
  • The full interview recording and transcript is included below. Our MPCC fair value estimate is NOK 10.00.
  • This idea was discussed in more depth with members of my private investing community, Value Investor's Edge. Get started today »

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Constantin Baack, CEO of MPC Containers (OTCPK:MPZZF), a leading small-sized containership lessor, joined J Mintzmyer's Value Investor's Edge Live on 9 February 2021 to discuss this segment of the surging containership markets.

MPCC is one of our current top picks at Value Investor's Edge, and is significantly benefiting from surging rates. Although it's not currently listed in the US markets, there's sufficient trading liquidity on the Oslo Exchange ("MPCC") and they are considering a potential US-listing if market conditions remain favorable throughout the year.

For more particular information on MPC Containers, I highly recommend reviewing their latest earnings presentation, which was published on 25 February. Their full Q4-20 financial report is also linked.

For readers and listeners primarily interested in US-listed names, the primary comps include: Atlas Corp. (ATCO), Capital Product Partners (CPLP), Costamare (CMRE), Euroseas (ESEA), Global Ship Lease (GSL), Navios Maritime Containers (NMCI), Navios Maritime Partners (NMM), and SFL Corp. (SFL). The content from this interview should be relevant for investors in all of these names.

Topics Covered

  • (<1:00): Intro/Disclosures
  • (1:00): What is driving the recent strength in smaller containerships?
  • (4:30): Strategy for the charterbook? Durations vs. rate levels?
  • (7:20): Discount level of one-year vs. two-year charters?
  • (8:30): Structure of the MPCC pool with 15 ships? Plans for charter cover?
  • (9:45): Any plans for a US-listing? Is the IPO market available?
  • (11:45): Dividend plans and potential policy structure?
  • (14:30): Capital allocation priorities into mid-2021? Asset purchases?
  • (16:45): Are accretive asset purchase opportunities still available?
  • (19:45): Any differentiation of interest within smaller-sized ships?
  • (22:15): Merger and consolidation opportunities in this sector?
  • (25:00): What is the typical

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This article was written by

J Mintzmyer profile picture
19.9K Followers

J Mintzmyer specializes in deep value stocks in the maritime shipping sector. He has earned a PhD from the Harvard Kennedy School, where he researched sanctions and trade flows. Previously, J earned an MPP from the University of Maryland, worked as a research intern with the White House Council of Economic Advisors, and earned a Bachelors in Economics from the U.S. Air Force Academy.

J is the Founder and Head of Research of the investing group

Value Investor's Edge

, a deep value research community focused on maritime shipping. He leads a team of six analysts and experts who focus exclusively on maritime shipping and related energy infrastructure. The team has delivered consistent outperformance since launch in 2015. It offers exclusive analytics, research reports, earnings coverage, and a live chat with an engaged community of more than 750 members.

Learn more

.

Analyst’s Disclosure: I am/we are long ATCO, DAC, CPLP, MPCC, NMCI, NMM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (28)

galicianova profile picture
J Mintzmyer@ "MPCC is one of our current top picks at Value Investor's Edge". is it true today as well?
a
Another great interview, thanks. Good to see that the Oslo listings are getting some attention as well. Long MPCC.
Helg11 profile picture
Great content J! đź‘Ť If anyone is interested in more data on MPCC like fleet employment, projected cash generation, comparisons vs $NMCI / $DAN / vesselsvalue index, please check shared Google sheet : docs.google.com/...
Helg11 profile picture
edit $DAC
Jowaniter profile picture
@Helg11
Very nice recap for MPCC.Congratulations.
I think your numbers speak for themselves.
A forward p/e of 7.11 isn't terrible in container space.
Last summer existing shareholders did a coup by issuing 260 million shares at 1 NOK and leaving only 'nougatbollen' (that is Flemisch :-) for small shareholders.
Helg11 profile picture
@Jowaniter thanks! Notice that I have prepared both a bear and a bull estimate. The forward 7.11 p/e is bearish, while Constantin is pointing to earnings closer to the bull estimate with a forward 2.01 p/e.
i
Loving the content J, keep it up. Do you think DAC and NMM are still buys at current prices, do they have any steam left or are they overextended? And the same for HLAG. Would love your thoughts on this
J Mintzmyer profile picture
@itgobrr ,

Both of those are still on my buying lists. $NMM in particular still trades at just a fraction of NAV with both containerships and dry bulk markets improving.
i
@J Mintzmyer thanks for that. if you only had to pick three, three must haves in the shipping industry which would they be? there are so many attractive options but honestly a pain to have like 10 stocks. atco, zim, dac, nmm, nmci, matx, hlag... i've probably missed a few
J Mintzmyer profile picture
@itgobrr ,

I'd prefer to buy 10-15+ names and spread things out a bit.

My top personal allocation is $NMCI/$NMM (same thing eventually)
Joeri van der Sman profile picture
I like MPCC.OL as a container pick.

The above was alreday pretty bullish, so its good to know that the newsflow and rates only got better last weeks since 10 Feb.
Jowaniter profile picture
@Joeri van der Sman
At 7 NOK MPCC is expensive :-)
No position and no intention to take one.
Joeri van der Sman profile picture
@Jowaniter Certainly way more expensive than NMCI, but they trade below NAV unlike many other container companies, so I wouldn't call them expensive.
J Mintzmyer profile picture
@Jowaniter ,

Expensive via what metric:

P/NAV?
EV/EBITDA?
Fwd P/E?
Relative to peers?
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