MPCC Container Ships – attractive long term investment opportunity
P/E: Price/Earnings: MPCC gave an update on 2025 forecast in second half of 2025 after sale of 7 container ships. The new guiding is a total turnover of 485-500 MUSD and an EBITDA of 305-325 MUSD. With historically approximately 20% of EBITDA going to other costs net profit is projected to come in at 252 MUSD for the year 2025. Divided by 443,7 million stocks and using a USD/NOK rate of 10,11 net profit per share will be 5,74 kroner. P/E based on the latest share price is then 16,49/5,74 = 2,87.
Price/Earnings of 2,87 is highly attractive and there is little uncertainty in the estimate as MPCC has already a contract coverage for its fleet for 2025 of 96%. P/E estimates for 2026 and 2027 is not known, but it looks very promising.

Contract coverage:
As already pointed out contract coverage for 2025 was at 96 % at 1Q presentation 22. May, with an average day rate of 26100 USD. For 2026 contract coverage is 77 percent with an average day rate of 23700 USD, and for 2027 the contract coverage is 28% with an average day rate of 26250 USD. This compares to an average operating costs per vessel of 6992 USD per day in 1Q 2025. The high contract coverage also for 2026 means that business risk on revenues are very low.

Financial solidity:
MPCC has for quite some time now had a dividend policy of dividends of 75% of net income, paid on a quarterly basis. MPCC announced a new dividend policy of 30-50% of net income at the 1Q 2025 presentation. The objective behind this change is to increase investment opportunities in a market that MPCC regards as favorable in the feeder container market.
MPCC financial position is very solid with a booked equity of 837,4 MUSD compared to a total interest bearing debt of 433 MUSD. Late in 1Q 2025 MPCC sold 7 ships that were almost debt free and with a substantial gain compared to book value. Second hand values for feeder container ships has also increased substantially in 2025, meaning real values and real solidity is even higher in MPCC.

Probable substantial growth going forward:
End 1Q 2025 MPCC had a cash position of 219,5 MUSD. Approx. 35 MUSD will be used for dividends, but the sale of 7 ships late 1Q, cash flow thus far in 2Q and a minimum cash requirement of 100 MUSD give an estimate of free cash to investment of approx. 200 MUSD as of today.
The change in dividend policy combined with a rapid increase in the fleet and activity in MPCC will further increase funds to invest in new ships. Proceeds from operating activities will gradually increase but on medium sight net investment quarterly is estimated to 40-50 MUSD. With average purchase prices of 30 MUSD and a debt finance of 50% MPCC can possibly increase its fleet with 13 new feeders today and then by three more ships each quarter. This is only an example of the maximum possibility to increase the fleet and activity, but it highlights that MPCC quite quickly can become a far bigger shipping company, and thereby boost its revenue and net income considerably. Information given by the company at the 1Q presentation and interviews post 1Q give some strong indication that MPCC will go in this direction.

Long term market outlook.
Demand: In it's 1Q 2025 presentation MPCC pointed to an average demand growth in the container feeder segment in the period 2024-2026 of 3,5 percent, with some differences between different regions. An average annual growth rate of 3,5 percent is substantial and can in itself result in a good market balance.

Supply: On the supply side MPCC in its presentation also showed that the order book for new ships in the container feeder segment is low, at only 6% of the existing fleet. This number is far below the that will be necessary to renew the fleet of feeders, especially also since 24% of the feeder ships are more than 20 years old. There are also very limited capacity on the shipyards to build new ships in the future ahead, where the shipyards prefer companies that places large orders for larger ships.

Summing up, a substantial growth meet a small or absent increase in supply (depending on the scrapping of older ships) in the container feeder segment, that probably will lead to healty freight rates and possibly a shortage of net supply.