Seanergy Maritime Holdings: Selloff Provides Buying Opportunity For Speculative Investors

seekingalpha2024-11-27

Despite a more volatile charter rate environment, leading dry bulk shipper Seanergy Maritime Holdings reported Q3/2024 results slightly above consensus expectations.Seanergy Maritime generated $20.4 ...

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Share repurchases continued at a measured pace.While Q4 should be another quarter with decent profitability and cash generation, Q1/2025 is likely to be much weaker due to the combination of seasonality with a heavy drydocking schedule.On the conference call, management remained positive on the Capesize market based on anticipated favorable supply and demand dynamics.The recent selloff in the company's shares might provide an opportunity for speculative investors to scale into the shares. Reiterating \"Buy\" rating with a price target of $11.   Iuliia Korniievych  Note: I have previously covered Seanergy Maritime Holdings Corp. (NASDAQ:SHIP), so investors should view this article as an update to my previous work on the company. Earlier this month, leading dry bulk shipper Seanergy Maritime Holdings (\"Seanergy\" or \"Seanergy Maritime\") reported Q3/2024 results slightly above consensus expectations despite some volatility in Capesize charter rates: Company Press Releases The company's average daily time charter equivalent (\"TCE\") rate came in at $26,529, above management's preliminary guidance in the Q2 earnings release. Seanergy Maritime generated $20.4 million in cash flow from operations and ended the quarter with $41.3 million in cash and $238.1 million in debt (net of $4.3 million in deferred financing costs). The company declared a quarterly cash dividend of $0.26 per share, up slightly from Q2 levels. In addition, Seanergy Maritime continued to repurchase shares in the open market:  Since our last update in the Company’s earnings release for the second quarter of 2024, the Company repurchased 121,826 common shares in open market transactions at an average price of $10.36 per share for an aggregate consideration of $1.3 million pursuant to the $25.0 million share repurchase program commenced in December 2023. Year to date, the Company has repurchased 404,041 common shares, at an average price of $9.58 per share for a total amount of $3.9 million. All the abovementioned shares were cancelled and removed from our share capital as of the date of this release. As of November 1, 2024, the Company had 20,489,165 common shares issued and outstanding.  Subsequent to quarter-end, the company took delivery of the Capesize carrier Kaizenship and exercised its purchase option for the Newcastlemax vessel Titanship. Seanergy Maritime now commands a fleet of nineteen vessels with an estimated market value of approximately $600 million: Company Press Releases On the conference call, management hinted to additional vessel acquisitions in the near future. At the time of the earnings release, the company had fixed 62% of available Q4 days at an estimated TCE rate of $25,827. Based on current forward freight agreement (\"FFA\") rates for November and December, the final number might be closer to $23,000. Please note that Q1/2025 is likely to be a very weak quarter due to seasonality and a number of vessels being scheduled for drydocking. With Seanergy Maritime's quarterly cash dividend being based on operating cash flow, a sizeable reduction might be in the cards. Company Presentation Despite lingering concerns regarding Chinese commodity demand going into 2025, management remained upbeat on the company's near-term prospects as the supply side remains in great shape with a heavy drydocking schedule and no meaningful growth expected for the worldwide Capesize fleet next year. Valuation-wise, the company's discount to estimated net asset value (\"NAV\") has increased to above 50% as a reduction in second hand vessel values was more than offset by the recent decline in the company's stock price: Yahoo Finance  Value Investor's Edge / Company Press Releases Seanergy Maritime continues to screen cheap vs. the majority of its peers: Value Investor's Edge However, with proven industry leaders like Star Bulk Carriers (SBLK), virtually debt-free companies like Genco Shipping & Trading (GNK) and owners of shiny new Newcastlemax vessels like Himalaya Shipping (HSHP) also changing hands at sizeable discounts to net asset value, investors are having the agony of choice in the current market environment. Please note that only Seanergy Maritime and Himalaya Shipping are exclusively focused on the largest vessel classes but with Seanergy Maritime owning mostly older Capesize carriers and Himalaya Shipping commanding a highly-levered fleet of modern Newcastlemax vessels, there are still material differences between both companies. Considering Seanergy Maritime's steep discount to estimated net asset value in combination with a strong commitment to shareholder capital returns, speculative investors with the ability to stomach the inherent volatility of the Capesize market should consider using the recent weakness to enter a position in the company's shares. Please note that the discount to NAV was below 30% earlier this year when the near-term outlook was considered more favorable. Bottom Line Seanergy Maritime Holdings reported Q3/2024 results above expectations and raised its quarterly cash dividend slightly to $0.26 per share. Based on the company's preliminary TCE guidance, Q4 should be another solidly profitable quarter, albeit at somewhat reduced levels. However, Q1/2025 is likely to be much weaker, with anticipated seasonality exacerbated by a number of scheduled drydockings. A more volatile charter rate environment and uncertainties regarding Chinese commodity demand going into 2025 have resulted in dry bulk shipping stocks taking a major hit in recent weeks. For speculative investors sharing management's positive assessment of near-term Capesize market prospects, the selloff could provide an opportunity to establish a position in Seanergy Maritime's common shares at deeply discounted levels.  Consequently, I am reiterating my \"Buy\" rating with a price target of $11 which is based on an assigned 35% discount to net asset value.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.2","shortVersion":"4.30.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2486381731"}