MPCC:NO

MPC Container Ships is a Norway-listed owner of small to mid-size container vessels that it charters to global and regional liners on fixed-rate time charters. It is not a liner; it is essentially a landlord of ships whose earnings are driven by charter rates, utilization, and residual vessel values. As of mid-2025 the fleet stood at roughly 59 ships with a focus on 1,300–5,500 TEU feeders, enhanced by a renewal program that includes dual-fuel methanol vessels for Northern Europe trades and a quartet of 4,500 TEU dual-fuel-ready ships delivering from late 2027 on three-year charters. This mix is visible in the company's financial reports (fleet count, deliveries, sales) and in July and October 2025 regulatory releases that detail the newbuilding orders and their contracted employment and economics.

Price and valuation anchors matter. On Oslo Børs the shares recently traded at NOK 16.75; with 443.7m shares outstanding, that is about NOK 7.43bn of market cap. Using a contemporaneous NOK/USD of roughly 10.1 converts to about USD 0.73–0.74bn of equity value; adding Q2 net debt of about USD 129m implies an enterprise value around USD 0.86bn. I label the FX rate as an assumption for today's calculation; the other inputs come from the exchange and the company's filings.

The recent P&L profile is straightforward. Q2 2025 operating revenues were USD 137.9m, adjusted EBITDA USD 80.7m, adjusted net income USD 48.6m, adjusted TCE USD 26,247/day and adjusted OPEX USD 7,707/day, with utilization at 97.6%. These numbers are clean of vessel sale gains and tie to the fact that MPCC is primarily long charter coverage rather than a spot trader. The distribution for Q2 was USD 0.05/share, framed as 50% of adjusted net profit under the updated dividend policy.

Pricing power for a tonnage provider is limited; this is a price-taking business with high operating leverage to charter rates. Where MPCC does have agency is in locking in forward employment when the market is tight, rigorously managing OPEX and off-hire, and turning the asset cycle by selling older ships into strength and buying or ordering modern tonnage against pre-arranged charters. The Scandinavian model—low leverage, industrial charters, governance discipline—is the right one for a cyclical asset business, and it is the model MPCC articulates and has followed during the recent upturn.

I see three structural reasons. First, flows and holder base. The stock is Oslo-listed, yield-heavy, and for two years was owned for outsized variable dividends. In May 2025 management reset the distribution policy to 30–50% of net profits, a rational move to fund renewal but one that caused a sharp retail-driven sell-off and a step-down in income-fund appetite. That policy change is documented on the company's site and was reported by the Norwegian financial press along with the market reaction.

Second, narrative traps. The consensus fear is that this is still an over-earner off a transient dislocation. If the Red Sea normalizes and the industry speeds up, effective supply rises and charter rates fall; therefore, the instinct is to extrapolate down. The nuance missed in that narrative is the level of MPCC's fixed coverage into 2026 and the relative tightness in sub-5,000 TEU feeders where the orderbook is small and a large share of the fleet is past 20 years of age. Lloyd's Register recently highlighted that vessels under 5,000 TEU constitute just 6.5% of the container orderbook while many feeders are already old—a structural support for this corner of the market even if big-ship supply swings.

Third, information timing. The company has been active—selling older ships, ordering new fuel-efficient ones, and fixing multi-year employment—but those releases and the Q2 report hit during a choppy macro tape and immediately after the dividend reset. I think the market has not yet re-underwritten the portfolio as it stands today: high coverage and liquidity, gross fleet fair value marked at USD 1.534bn, gross debt USD 535m, and 27 debt-free vessels worth roughly USD 650m. Those facts are on one slide; they are not widely reflected in sell-side summary tables or in high-level screeners.

The recent pattern is what I like to see in a cyclical shipowner: forward fixing into strength, opportunistic asset sales of older tonnage, and disciplined ordering against charters. In March and July 2025 MPCC agreed to sell multiple older 1,300–2,000 TEU ships, crystallizing gains while reducing environmental and capex risk; in July it ordered four 4,500 TEU dual-fuel-ready ships against three-year charters expected to generate about USD 140m of revenue and USD 100m of EBITDA over those initial periods; in October it added two 1,600 TEU vessels on eight-year charters expected to generate roughly USD 92m of revenue and USD 54m of EBITDA per vessel across the firm terms.

The company also broadened its financing base with new secured facilities and a 7.375% sustainability-linked unsecured bond. I read the dividend policy change as a prudent rebalancing toward renewal in the face of EU ETS and CII headwinds, not a signal of weakness.

In container shipping, demand is ton-miles, not just boxes, and supply is fleet × speed × utilization. Since late 2023 the Red Sea crisis induced a broad reroute around the Cape of Good Hope that lengthens Asia–Europe and Asia–US East Coast voyages by roughly 9–14 days, lifting effective demand and sucking up feeder capacity in transshipment hubs. S&P Global and other trackers have quantified the impact on ton-miles; some estimates put TEU-mile growth at approximately the high-teens for 2024 as services were re-routed, and more recent market updates suggest carriers largely remain diverted in 2025. These are not certainties for 2026, but they are the operative facts for the next few quarters.

Regulatory pushes also matter. EU ETS and IMO CII/EEXI regimes effectively tax speed and carbon and create costs for calling EU ports. Those rules are being phased in at 40% of 2024 emissions surrendered in 2025, 70% in 2026 and 100% from 2027. The economic upshot is lower optimal speeds and earlier scrapping, both supportive of time-charter rates for efficient feeder tonnage.

At the vessel level, the financial bridge is simple. OPEX/day is relatively stable; most rate changes drop to EBITDA. MPCC's Q2 2025 adjusted TCE/day of about USD 26.2k against adjusted OPEX/day of about USD 7.7k leaves ample contribution to cover G&A and interest. This is why the company could generate USD 80.7m of adjusted EBITDA in the quarter on 5,062 trading days, and why EBITDA scales so sensitively with rates and off-hire. This is textbook shipping operating leverage.

I restate the current profile into a steady-state lens. The company guides to USD 485–500m of 2025 revenue and USD 320–335m of EBITDA after the July actions; H1 adjusted net income was USD 96.8m, Q2 adjusted net income USD 48.6m. If I simply annualize Q2 adjusted EBITDA (assumption), I get a run-rate near USD 320m; on today's enterprise value of roughly USD 0.86bn that is 2.7× EV/EBITDA. Mark-to-market net leverage is low, with gross debt USD 535m, cash and equivalents USD 359m at Q2, and pro-forma liquidity of about USD 485m including an undrawn RCF—a conservative position for a cyclical owner. Charter coverage of 100% for 2025 and 89% for 2026 gives unusually high forward visibility for a time-charter owner, with a backlog around USD 1.2bn.

Normalization risk is real, so I stress it. If feeder charter rates retrace 20% and utilization softens by 100–150 bps through 2026 as Red Sea diversions fade, the model still throws off positive FCF before growth capex given the OPEX/day profile and coverage; the damage lands in 2027 when current coverage tails off to 34%. This is where the renewal program against contracted employment helps: the four 4,500 TEU ships add a combined ~USD 100m of EBITDA over the first three years starting 2027, and the two 1,600 TEU units add long-dated, charter-backed EBITDA, partially offsetting re-charter risk. I am explicit that these figures are company-provided and represent forward contracts; they are not yet realized cash.

Relative. At ~2.6–2.8× EV/EBITDA on annualized Q2, MPCC trades below the 4–6× mid-cycle multiples where quality tonnage providers with coverage and low leverage usually change hands at this point in a tightening cycle; price-to-NAV is the primary metric for this sector, and on management's Q2 fleet fair value of USD 1.534bn and net debt of about USD 129m, I estimate NAV around USD 1.405bn or USD ~3.17/share, versus a USD-converted price of roughly USD 1.65/share today—about 0.52× P/NAV. Even after haircutting fleet fair value by 10% and adding a normal working-capital cushion, the discount remains wide relative to historical mid-cycle ranges for disciplined owners.

Absolute. A stripped-down earnings-power view says Q2 adjusted net income annualizes to about USD 190–200m (assumption). Maintenance capex for this fleet is modest relative to EBITDA; the heavy cash outlays ahead are growth capex tied to the newbuilds, which are offset by the secured debt facilities and the contracted EBITDA they bring. If current-ish earnings persist for four years (assumption consistent with backlog and coverage into 2026), cumulative earnings to equity could roughly match today's equity value even before considering residual fleet value—a useful sanity check for a deep-value lens but not the primary driver in a cyclical asset business. The more durable anchor here is asset value versus price, which is why I center P/NAV.

Reverse-DCF / implied expectations. Pricing the equity at ~USD 0.74bn and backing into the cash generation suggests the market is implicitly demanding a sharp step-down in EBITDA post-2026 and a sustained discount to broker NAV. That is plausible if the Red Sea reopens and speeds normalize quickly, but less consistent with the state of the feeder orderbook, yard constraints, and regulatory slow-steaming incentives. I label this as an inference from the facts regarding orderbook composition and regulation rather than a certainty.

Quantified scenarios for 12 months. My base case assumes asset values flat, coverage unchanged, and the market paying 0.70–0.75× NAV as confidence rebuilds. On USD ~3.17 NAV/share that implies USD 2.22–2.38/share, plus roughly USD 0.20 of dividends at the current quarterly rate, for about 45–60% total return. The bear case applies a 15% NAV haircut (fleet fair value to USD ~1.30bn) and 0.50× P/NAV, which would be roughly USD 1.30/share; with dividends that is a 10–20% loss. The bull case applies a 10% NAV uplift and 0.80× P/NAV in a persistently tight market, pointing to USD ~2.75–2.85/share plus dividends for 70–80% total return. Assumptions are clearly identified; NAV inputs and coverage are drawn from Q2 disclosures and the market price/FX from public sources.

The clean bear story is a quick exit from the Cape route and a rebound in fleet speeds that releases effective supply and hits both rates and asset values. I will treat the following as falsifiers for the long:

• A sustained fall in 1,700–2,500 TEU time-charter fixtures below USD ~12–14k/day for multiple months
• A step-down in MPCC's disclosed 2026 coverage below ~75% without offsetting new long charters
• A rise in net debt above USD 400m without commensurate contracted EBITDA

A charterer credit event is a known tail risk, although MPCC's counterparties are "top-tier liners" by its own disclosure; I would watch receivable aging and any impairment commentary. The hedge for sector exposure is to pair the position with a short in a liner more sensitive to spot freight rates if one expects freight to fall faster than charter rates, or to use optionality around ex-div dates to manage income volatility. Regulatory risk (ETS/CII) is two-edged; it raises some costs for EU-exposed voyages but also taxes speed, often net-supportive of time-charter markets; I will still monitor compliance capex and any dry-dock-related off-hire.

I am long. The entry range I like is around the current NOK 16–18 band (USD ~1.60–1.80) given the roughly 0.5× P/NAV starting point, the 12% annualized cash yield at the current USD 0.05 quarterly dividend, the 100%/89% coverage into 2025/2026, and the de-risking mix of asset sales and contracted newbuilds. My return math in the base case is a move to 0.70–0.75× NAV as operating cash keeps coming and as the holder base re-underwrites the policy shift, with dividends on top.

The signposts I will watch closely are re-charter rates in the 1,700–3,000 TEU segments, MPCC's quarterly coverage updates, any material change in EU ETS implementation costs, and geopolitical headlines around Red Sea transits. If the Red Sea normalizes faster than expected and Harpex for feeder sizes rolls over sharply while MPCC's coverage for 2026 slips below ~75% and NAV marks fall 15%+, I would revisit and could exit. As of now, the evidence weighs toward a positively-skewed 12-month setup.