CTRM - Added Vessels To Their Fleet and Are Ready to Take Advantage of Increasing Shipping Rates

Summary Dry-bulk shipping demand is rising and expected to exceed fleet growth which will result in increasing shipping rates – good for CTRM CTRM raised capital (share issuances and debt finance) and acquired a number of new dry bulk vessels to their fleet With upcoming delivery of vessels and increasing shipping rates CTRM is well positioned to take advantage of improving market conditions   Market Overview and CTRM Vessel Acquisitions Demand will surpass fleet growth in 2021 and 2022 Quote from a reputable data-driven shipping company “we firmly believe that 2021 and 2022 will deliver demand growth that exceeds the fleet growth. This will increase freight rates. While we do believe that higher freight will trigger more newbuild orders we expect supply growth to trail demand growth in the coming 5 years due to the uncertainty around the choice of fuel and propulsion systems” Article here Article discussing shipping costs to rise in 2021 here    CTRM has more vessels and Dry Bulk shipping rates are rising. The Baltic Dry Index is reported daily by the Baltic Exchange in London. The index provides a benchmark for the price of moving the major raw materials by sea. Link here CTRM has added a number of new carriers to their fleet. This is a good sign, and as they start to take delivery of these vessels they will be able to take advantage of higher sipping rates and sign profitable charter agreements.  I calculated the potential revenue based on Dry Bulk Charter rates today and estimated the number of days each vessel would be chartered for. Both of these calculations are quick estimates of potential revenue for CTRM. For reference if you can earn about $6M/year with a Kamsarmax the payback period is about 2.5 ~ 3 years. This is seen from the price recently paid for these vessels. # of Ships Rate Per Day Days Chartered (Low Case) Revenue (Low Case) Days Chartered (Ideal Case) Revenue (Ideal Case) Capesize 1 $20,750 200 $4,150,000 300 $6,225,000 Kamsarmax 4 $19,500 200 $15,600,000 300 $23,400,000 Panamax 6 $19,500 200 $23,400,000 300 $35,100,000 Total $43,150,000 Total $64,725,000 Breakdown of CTRM’s current vessels – total capacity of 1.2 million dwt 1 Capesize 4 Kamsarmax 6 Panamax 2 Aframax tankers (not included in the calculations) Cargo Ship info here Link to rates here A summary of recent vessel acquisitions by CTRM March 10, 2021 – Vessel Acquisition – Kamsarmax $15.45M Link here March 3, 2021 – Delivery of Kamsarmax and signed charter agreement which will generate a revenue of $2.8M minimum and up to $4.2M link here Feb 3, 2021 – Vessel Acquisition – Kamsarmax for $14.5M link here Feb 1, 2021 – Vessel Acquisition – Kamsarmax for $15.85M link here Jan 10, 2021 – Vessel Acquisition – Capesize for $17.5M link here The total cost for Castor to acquire these vessels was ~$63 million. This is significant and leads me to my next point – they needed to raise money to acquire these vessels. Recent Financing Activities Jan 22, 2021 - $15M in debt financing link here Jan 8, 2021 – Raised $26m – 137M shares at $0.19 link here Dec 31, 201 – Raised $18M – 98M shares at $0.19 link here   Over the last 3 months CTRM has access to $49M – this was and will likely be used to pay for vessel acquisitions Institutional Ownership - Large Holder and Recent Buying Are Good Signs Link here Typically, it is a good assign if institutes are holding a decent number of shares. The table below shows institutes hold a decent number of shares in CTRM. This next tables shows that institutes have been buying CTRM (and significant amounts) over the last few weeks, whioch is another great sign. If they didn’t believe in potential upside they would have been selling their position in CTRM Risks Debt to Equity: CTRM is sitting at a D/E ratio of 35.3% which is considered high. Price to Book: CTRM is overvalued based on its PB Ratio 2.4x compared to the US Shipping industry average 0.9x. P/B ratios under 1 are typically considered solid investments. This is important because CTRM is a shipping company so it’s vessels are assets and make up a large portion of the company’s book value Shareholder Dilution – over the last year CTRM shareholders have been significantly diluted, that being said the recent acquisitions of vessels which will generate revenue and cash flow do look promising Summary TLDR: Financing through share issuance hasn’t been great for CTRM, however they used this cash to acquire a number of vessels and increase their fleet. With demand in dry-bulk shipping increasing CTRM is well positioned to take advantage of higher shipping rates. Intuitional investors are also staring to buy into CTRM – typically a good sign.

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CTRM - Added Vessels To Their Fleet and Are Ready to Take Advantage of Increasing Shipping Rates

Mar 12, 2021

bullish

general Analysis

[4 min Read]

blog post cover photo

Summary

  • Dry-bulk shipping demand is rising and expected to exceed fleet growth which will result in increasing shipping rates - good for CTRM
  • CTRM raised capital (share issuances and debt finance) and acquired a number of new dry bulk vessels to their fleet
  • With upcoming delivery of vessels and increasing shipping rates CTRM is well positioned to take advantage of improving market conditions

Market Overview and CTRM Vessel Acquisitions

Demand will surpass fleet growth in 2021 and 2022

Quote from a reputable data-driven shipping company “we firmly believe that 2021 and 2022 will deliver demand growth that exceeds the fleet growth. This will increase freight rates. While we do believe that higher freight will trigger more newbuild orders we expect supply growth to trail demand growth in the coming 5 years due to the uncertainty around the choice of fuel and propulsion systems”

Article here

Article discussing shipping costs to rise in 2021 here

CTRM has more vessels and Dry Bulk shipping rates are rising.

The Baltic Dry Index is reported daily by the Baltic Exchange in London. The index provides a benchmark for the price of moving the major raw materials by sea. Link here

CTRM has added a number of new carriers to their fleet. This is a good sign, and as they start to take delivery of these vessels they will be able to take advantage of higher sipping rates and sign profitable charter agreements. I calculated the potential revenue based on Dry Bulk Charter rates today and estimated the number of days each vessel would be chartered for. Both of these calculations are quick estimates of potential revenue for CTRM.

For reference if you can earn about $6M/year with a Kamsarmax the payback period is about 2.5 ~ 3 years. This is seen from the price recently paid for these vessels.

# of Ships Rate Per Day Days Chartered (Low Case) Revenue (Low Case) Days Chartered (Ideal Case) Revenue (Ideal Case)
Capesize 1 $20,750 200 $4,150,000 300 $6,225,000
Kamsarmax 4 $19,500 200 $15,600,000 300 $23,400,000
Panamax 6 $19,500 200 $23,400,000 300 $35,100,000
Total $43,150,000 Total $64,725,000

Breakdown of CTRM's current vessels - total capacity of 1.2 million dwt

  • 1 Capesize
  • 4 Kamsarmax
  • 6 Panamax
  • 2 Aframax tankers (not included in the calculations)

Cargo Ship info here

Link to rates here

A summary of recent vessel acquisitions by CTRM

  • March 10, 2021 - Vessel Acquisition - Kamsarmax $15.45M Link here
  • March 3, 2021 - Delivery of Kamsarmax and signed charter agreement which will generate a revenue of $2.8M minimum and up to $4.2M link here
  • Feb 3, 2021 - Vessel Acquisition - Kamsarmax for $14.5M link here
  • Feb 1, 2021 - Vessel Acquisition - Kamsarmax for $15.85M link here
  • Jan 10, 2021 - Vessel Acquisition - Capesize for $17.5M link here

The total cost for Castor to acquire these vessels was ~$63 million. This is significant and leads me to my next point - they needed to raise money to acquire these vessels.

Recent Financing Activities

  • Jan 22, 2021 - $15M in debt financing link here
  • Jan 8, 2021 - Raised $26m - 137M shares at $0.19 link here
  • Dec 31, 201 - Raised $18M - 98M shares at $0.19 link here

Over the last 3 months CTRM has access to $49M - this was and will likely be used to pay for vessel acquisitions

Institutional Ownership - Large Holder and Recent Buying Are Good Signs

Link here

Typically, it is a good assign if institutes are holding a decent number of shares. The table below shows institutes hold a decent number of shares in CTRM.

This next tables shows that institutes have been buying CTRM (and significant amounts) over the last few weeks, whioch is another great sign. If they didn't believe in potential upside they would have been selling their position in CTRM

Risks

  • Debt to Equity: CTRM is sitting at a D/E ratio of 35.3% which is considered high.
  • Price to Book: CTRM is overvalued based on its PB Ratio 2.4x compared to the US Shipping industry average 0.9x. P/B ratios under 1 are typically considered solid investments. This is important because CTRM is a shipping company so it's vessels are assets and make up a large portion of the company's book value
  • Shareholder Dilution - over the last year CTRM shareholders have been significantly diluted, that being said the recent acquisitions of vessels which will generate revenue and cash flow do look promising

Summary

TLDR: Financing through share issuance hasn't been great for CTRM, however they used this cash to acquire a number of vessels and increase their fleet. With demand in dry-bulk shipping increasing CTRM is well positioned to take advantage of higher shipping rates. Intuitional investors are also staring to buy into CTRM - typically a good sign.

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CTRM

Castor Maritime Inc.

1.46

-0.06
-4.28%

Return

-84.92%
Change % Since Posting
-8.20
Change Since Posting
9.65
Price When Posted

Metrics

11.60
Target Price
9/ 10
Confidence
< 1 Week
Timeframe
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SEC
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