Praise for Navios

Two US equity analysts have come away impressed by Angeliki Frangou-led Navios Maritime’s latest grab of “distressed” assets and an earnings beat for the second-quarter.

Both Urs Dur of Lazard Capital Markets and Natasha Boyden of Cantor Fitzgerald and maintaining “buy” ratings on the stock, with Dur suggesting a $7 target price and Boyden looking to $6.

While profits fell 70% year over year, the Navios performance of $0.12 was solidly above the consensus earnings expectation of Wall Street analysts at $0.10.

Dur goes into some detail on Navios’ companion announcement that it is buying two more capesize newbuildings from a South Korean shipyard with a nominal value of $141.5m, but potentially going to the owner at $57.8m each if all breaks right with Navios’ use of convertible shares in the deal.

Because the ships come with 10-year charters at a net rate near $29,000 per day, with profit sharing above $38,500 per day, “(they) appear soundly above net income breakeven per ship per day, for the financing/funding involved,” Dur writes.

The structure is similar but not identical to Navios’ acquisition of four capesizes announced in June, he said.

“We note that the June acquisitions have qualified for Navios’ exclusive Belgian investment-grade charter insurance and we expect that the new acquisitions will achieve the same. We have been expecting Navios to grow and we continue to expect it to grow,” Dur reports.

While Boyden does not go into detail on the economics of the two newly acquired capes, she does note that they come from the same South Korean shipyard as the four-unit deal in June.

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