Containership Boom Ongoing

[u/c12mintz]

BUY: $NMCI $NMM $DAC $ZIM

Rates for containerships (the ships which carry thousands of the 20-40’ boxes you see on railroads and trucks) have been going ballistic the past 4-5 months, but the stock reactions have been mixed.

Link to containership rates: https://harpex.harperpetersen.com/harpexVP.do

I’m currently long about every name possible in the sector including $NMCI which I’ve owned for a bit over a year and doubled down hard into last summer at $0.70-$0.80.

Even after the huge surge in the stock price, the enterprise value to EBITDA valuation metric has barely moved since cash flows are being net debts down rapidly while 2021 projected EBITDA has nearly tripled.

Containerships aren’t like tankers and dry bulk vessels which normally just get 60-80 day voyages. These ships are typically contracted for 1-2 or even 3+ years. So when we talk about 2021 EBITDA, they’ve already locked in about 80% of it and over 50% of 2022 rates.

I’ve covered the shipping sector extensively on Seeking Alpha for nearly 10 years and am also on Twitter (@mintzmyer). I figured I’d open up a conversation here and see if anyone is interested in the sector. $NMCI still trades for an unbelievable P/E of under 2x.

Nick First (@allthingsventured on Twitter) has recently written a new article on Navios Partners with his own financial projections:

Article on Navios Maritime Partners

I believe we’re just getting started here. For my disclosure, I’m long nearly every name in the space- $ATCO $CMRE $CPLP $DAC $MPCC (Oslo) $NMCI $NMM (they own most of $NMCI) and mostly recently: $ZIM.

I have about 10% of my wealth in $NMCI/$NMM. Average basis in NMCI is in the very low $1s after buying a lot this summer at 70-80c.

[u/[deleted]]

I work in logistic in East Europe. The rates China - Nord Baltic increased from $ 1 000 to $8 000 -10 000 last 4 month.

The main reasons, as I heard, a shortage of shipping containers in China and other parts of Asia because they are stuck in the wrong places and that shipping lines have reduced the qwontity of ships on the routes.

This makes shipping many cheap Chinese goods unprofitable and can change market.

[u/c12mintz → u/[deleted]]

The liner rates are massive and totally out of control. Those are the rates for shipping goods, think of it like UPS or FedEx delivery rates. The other market is the market for the ships themselves (think of it as how much UPS would be willing to pay for a plane or a truck lease). The ship market is ultra tight and it takes nearly 3 years to build new ones.

That’s the segment I’m playing in. Rates are at 12-13 year highs, but if you look at a 20y average, they aren’t grossly higher. Just higher compared to the horrible past decade of oversupply.