Mpc Container Ships As

Good afternoon and good morning, everyone. This is Konstantin Barg, CEO of MPC Containerships, and I'm joined by our CFO, Moritz Fuhrmann. I would like to welcome you to our Q4 2022 earnings call. Thank you for joining us to discuss MPC Containerships fourth quarter earnings. This morning, we have issued a stock market announcement covering MPCC's fourth quarter results for the period ending December 31st, 2022. The release as well as the accompanying presentation for this conference call are available on the investor and media section of our website. Please be advised that the material provided and our discussion today contain certain forward-looking statements and indicative figures. Actual results may differ materially from those stated or implied by forward-looking statements due to risk and uncertainties associated with our business. Now, before we start with today's presentation, I would like to address a few words from my side reflecting on the past year. We are pleased to report another strong quarterly result today, rounding off what has been the best financial year since MPCC's foundation. This past year has brought a variety of challenges and opportunities, including periods with the highest charter rates in the history of container shipping, but also significant geopolitical and macroeconomic challenges. and a rapid decline in freight and charter rates throughout the second half of the year 2022. At MPCC, we focus on being agile and well-equipped to adjust our operations and strategy to fit the prevailing market conditions. During the first half of 2022, we were able to capitalize on the strong charter market by locking in long-term charter contracts at very attractive rates, establishing a very solid charter backlog of $1.5 billion. We also continue to deleverage the company and currently operate with an industry-low leverage. Over the past month, as part of our ongoing strategy for selective portfolio optimization, we have announced several new and accretive portfolio measures, which include continued divestment from our Bluewater joint venture, for example, as well as investment in younger, larger, scrubber-fitted vessels with existing charter contracts. These measures are not only earnings accreted, but also important efforts to maintain our long-term competitive position. The container market has clearly come down from the historical highs seen in 2021 and early 2022, yet it is important to understand that the charter market is still at a very healthy level. We will discuss all of this in more detail during today's presentation, and I would like to hand over to our CFO, Moritz Fuhrmann, who will run us through the first agenda point of today's call.

Thank you, Konstantin. Kicking off the presentation, we will be looking at some highlights from the financial year 2022, obviously concluding the strongest year that MPCC has experienced in history. Net profit came in at 104 million. for Q4 and $435 million for the entire fiscal year 2022. Based on the adjusted net profit for Q4, the Board has declared a recurring dividend payment of $15 cents. This obviously excludes the event-driven dividend of $7 cents that is being distributed today. Including the event-driven dividend just mentioned, this brings us to a total distribution to shareholders of $537 million since February 22. While we have focused on returning capital to shareholders, we are also very much focused on deleveraging the balance sheet. Currently, based on Q4, we're looking at 16% leverage ratio and at the same time also very important pillar in our strategy is the fleet optimization. So during 22 and in Q1 23, we have been able to divest some of our joint venture ships and older ships in the fleet, while at the same time acquiring secondhand ships that are immediately accretive from an EPS and DPS perspective. And on top, we have concluded very interesting new building projects in 22. Looking at the market development. Obviously, the last six months have been characterized by falling box rate rates via the time charter rates. There was a very inactive period prior Chinese New Year. What we experience now after Chinese New Year is a rapid increase in activity, a lot of inquiries from charters that is also being reflected now in time charter rates, durations, but also in the S&P markets. So, what we see currently is that time shutter rates are stabilizing at levels above historical averages. The general outlook for our feeder segment is more favorable relative to the larger segments due to very good supply-demand dynamics. The order book via the fleet age is certainly more manageable looking at the feeder segment relative to the 8,000-plus TU segments. market uncertainties, MPCC is very well positioned going forward for 2023. As of today, we have a revenue backlog of $1.5 billion and we have fixed out 86% of days contracted for 2023. Again, as for today, our guidance for revenues is between 610 to 630 million on the revenue side and EBITDA between 420 to 450 million. Looking into more detail on some company KPIs, again, revenue EBITDA and profit development, very favorable, 22 relative to 21. Balance sheet, again, focus has been very much on deleveraging the balance sheet. We have currently 30 plus vessels unencumbered on the balance sheet, which gives us a lot of flexibility going forward. Financial KPIs, for the full year 21, we have distributed $1.03, and that is a combination of recurring dividends as well as eventual dividends. Obviously, focus going forward will be to maintain the dividend capacity of the company. Operational KPIs, unfortunately, on the operating side of things, we had some one-off effects in Q4 that led to elevated OPEX levels. If we were to normalize COVID and insurance impacts, The OPEX would be normalized by probably between $400 to $500 per day, which is then more in line with the full year 2020. This obviously has been offset by the favorable TCE that the fleet was able to achieve in the market. And also very, very positive is the utilization of close to 89% line share of the off-hire that we experienced in 2022. especially in Q4, was related to CAPEX and dry docking events. Looking at the company's charter activity throughout 22, I mean, you can see the clear development throughout the year. Very positive, obviously, that we've been able in the first quarter to conclude 23 fixtures with an average TC rate. of close to $40,000 per day. Q2 represents the 1,300 new buildings that we concluded with a 15-year time charter backed by an operator via the cargo operator. And then the clear path visible in Q3 and Q4. with rates coming down significantly from Q1, but nevertheless, we've been able to fix A-SHIPs in total at rates above historical average, which obviously is positive. Very important for us in 22, and here today, 23, but also going forward in 23 and 24, is the active portfolio management. We will emphasize on returning capital to investors, but at the same time, we look to optimize the fleet structure. In 22, we have divested eight ships with an average age of 16 years. In addition, we concluded two charter amendments bringing forward some cash flow while returning the assets on the balance sheet. So the divestment generated a total proceeds of 241 million. On the investment side of things, We ordered four new buildings and year-to-date acquired two second-hand ships with an average age of 4.5 years and a total capacity of 19,800. So overall, we were able to lower the fleet age profile and increase the TU operated once the new buildings are being delivered. Obviously the second hand acquisitions that we've done in Q1-23 are immediately accretive and supportive to mid to long term EPS and DPS. Also very important to mention is that the total construction and acquisition for the four new buildings and the two second hand vessels is $256 million, which is entirely backed by contracted EBITDA of $288 million. I think a very important point to mention that the entire project is being de-risked through attached employment. At the same time, we are very much focused on decarbonization. We have invested heavily in CARB-X in 2022, making a fleet fit for EEXI and CII. We've been carrying out biofuel trials with some charter partners. We have been executing some retrofit measures with joint investments with charters. It's also a positive sign that charters are willing to commit to retrofit together with tonnage owners. And then, again, just mentioned the 1300-year-old dual fuel method, no power, new buildings that we ordered in 22 and that are being delivered in 24, hopefully establishing the first green corridor in Northern Europe. Looking at the cash development in 22, and especially just wanting to show the allocation of capital. So, based on the healthy charter market and the rates that we've been able to log in, we've been generating operating cash flow of $582 million. As just mentioned, we invested heavily in our trading fleet, so there was some and we paid a new building installment totaling $100 million, and on the finance cash flow, again, The focus is twofold here. One is returning capital to investors. So throughout 2022 we've been distributing $439 million in dividends to investors while at the same time reducing debt on the balance sheet of $91 million. Broad strokes, 70 percent have been paid off dividends, 15 percent debt reduction, and 15 percent CapEx for new buildings. While we focus on portfolio optimization, we obviously don't lose focus on returning capital to shareholders, so wanting to zoom in a bit more detail in what has happened since Q4 21. So again, overall, year to date, we distributed $537.5 million to shareholders. $310 million was from recurring dividend, roughly 60%, roughly 40% was event-driven dividend. Clear intention going forward is to continue to pay dividends and enhance investments in the fleet, and the fleet optimization is crucial for the company and for the management. Looking at the share price in early 2022 and taking into account the dividends paid in 2022, this would have been yielded a dividend yield of close to 50%, which obviously in our view is very compelling. On that positive note, hopefully I'm handing over to Constantine.

Thank you, Moritz. I would like to continue with a market update and then continue with a company outlook. Please move to slide 10 of the presentation, starting off with some observations from the container freight market. The graph on the left-hand side shows the key indicators for ocean freight, namely the freight rate index and NUOTU throughput. While trade rates have come down significantly from all-time highs, volumes have basically peaked in 2021, coming slightly down in 2022, and are expected to run flat in 2023 before they are actually expected to bounce back in 2024. While the geopolitical and macroeconomic outlook is not particularly positive with high inflation and high interest rates, And we are rather in a global economic downturn scenario. The IMF has recently slightly upgraded its GDP forecast, and there are also first positive signs of relaxation for the latter part of 2023, some of which are depicted on the right-hand side of this slide. Some indicators are actually fairly good, at least trending upwards and signaling more positive economic growth perspectives. For example, in the Eurozone, we see inflation significantly down and that's following also the trend in the US. And we also see certain European Commission upgrades, for example, on GDP forecast for 2023. Of course, you know, the sustainability of those trends remain to be seen, but at least there are some more positive signals out there. Please turn to page 11 of the presentation where we now look at the S&P market and charter market dynamics in a bit more detail in terms of rates and also second-hand prices and vessel availability. Looking at the chart at the left-hand side, it becomes apparent that S&P prices and charter rates have also come down. quite notably from the historic high seen in 2021 and early 2022, yet they have recently stabilized. And what we have observed at least kind of a leveling out and just, you know, the last few days or this first week, we have seen on a week-on-week basically increase in time charter rate indices that have been reported both from Bremer and Howe Robinson, for example, Some of which can also be evidence when looking at our most recent charter fixtures. We'll get to that in a bit. And that means, as Moritz has also indicated, that we do see increased charter requirements. Also, or in particular, also from the large liner operators that have been fairly inactive in Q3, Q4 2022. Over the past few weeks, there has been way more activity post-Chinese New Year as expected, yet obviously it's a positive signal. And now also the indices show at least start to increase in terms of rate levels, and you can see a bit of a flattening out or maybe even bottoming out at this stage. On the right-hand side of this chart, of this page, you can see availability of charter vessels since 2020, and you can see that the overall TU availability has come down quite notably by more than two-thirds if you compare 2020 with 2021, reasoning obviously being the fact that during 2020's latter part, and certainly 2021 in the first half of 2022, we have seen longer charters being fixed across segments and sizes, and therefore the availability of tonnage has somewhat dried out going forward. In addition, what is also interesting to note, and that's illustrated in some of the boxes at the bottom of this slide, bottom right in particular, and second right, and that is that we have already observed slower service speeds. Here we have, you know, referred to the Clarkson speed index, which has shown a minus 4% decrease in January 2023 on a year-on-year basis. What we can confirm is, also looking at our very own fleet, that we do see service speed reductions up to 10% in certain trades. Obviously, there are definitely differences in regional trades as far as the speed profile is concerned. But what we also believe is that this is not yet based on revised schedules by liner companies, but rather on individual orders to go slower. And we believe that the actual effect of revised schedules and port rotations and trades might only be visible throughout 2023. It's obviously too early to draw a firm conclusion from this, but we do expect to see CLIRA in the next couple of months and quarters, and I certainly expect that we will see more implications from regulation on speed profiles, et cetera. And that's the bottom right box where we have shown some figures. It is quite interesting to see, in fact, that we have seen quite a number of new feeder services being opened between October 2022 and February 2023. In fact, it has been 68 new services that have been opened, which compared to the same the year before represents around 45% more services. So there is an increased activity. Also there it's probably a bit too early to draw a conclusion what that means, but certainly there are a number of new services being opened and certainly more than 12 months ago. Overall, to summarize kind of the macro picture, the freight market picture and also the charter and S&P market picture, It's quite interesting in my view to see that in 2022 we have seen a tumbling macro economy and at the same time actually chart rates have held up quite well in the container industry in general, basically seeing record levels. And that means the macro economy has dropped first, while the charter market last year has still remained fairly strong initially and then has followed with quite significant growth. decrease in Q3 and Q4. What we now see is, I wouldn't say the opposite, but almost the opposite. The charter market is still moving sideways and starting to increase somewhat. And at least there are certain macro signs more for the latter half of this year, obviously, that show a rather improving perspective. Of course, the sustainability of this trend remains to be seen, especially in light of the current economic downturn. But there are a few, I would say, comforting trends that we have seen recently. Now please turn to page 12 of the presentation where we take a closer look at the order book composition by size but also by fuel type. Let me start from the left hand side to the right basically. What we see is here TEUs on order by different size segments, so on the x-axis you see 0 to 4,000 TU, 4 to 8,000 TU, and above 8,000 TU as far as the order book is concerned. What you can see is that in terms of order book to fleet ratio, a very significant portion of the order book in general, and also comparing it to the fleet on the water, is the very large ships. And the smaller the ship, the smaller the order book in relative and in absolute terms. What is also quite interesting is the different colors stacking in the different columns here, being global liner carriers, intra-regional carriers. and either non-operating carriers charter-backed, i.e., vessels ordered by tonnage providers with a charter attached or without a charter attached. These are the two blue-colored parts of the column, and the interesting part there is that if you look at the very large liner, the global liner companies, they have basically deployed their capital and have invested into the very large ships. And the smaller segment, and it's even more interesting when we come to the next slide, when we also look at the age profile in that context, has been in comparison underbuilt, certainly when you look at the age profile. And for the global liner companies, if you then also shift to the right-hand side with the different pie charts here, you can also see the different fuel types, dual fuel versus conventional fuel, or the book, when you look at the different sizes and segments and what is Visible is that the larger the ship, the more mixed the picture being LNG and methanol dual fuel engines on the very large ships. Why is that? That is basically because the whole fuel infrastructure is known and can be used on the mainline trades where the very large ships operate. Let's say propulsion technology question is way easier to answer on the very large ships because the fuel infrastructure is there, especially for LNG and supposedly over time also for methanol. The smaller the vessels, the fewer or the more vessels with conventional propulsion have been ordered. We believe that especially looking at the large liner companies that they will throw their dice over time. once there is a clearer picture on the right fuel on the right trade. Currently, the smaller vessels are and they will remain the flexible part of the supply offering and the service offering of the liner companies. Therefore, they have not focused on ordering big time. We believe, looking at the age profile, extremely important going forward to maintain the same service offering. And we do expect over the next couple of years that there will be more orders in the smaller sizes, which are, however, looking at the age profile, also necessary. And on the note of age profile, let me move to the next slide, slide 13. And here on the top left, we can see a matrix where we have shown On the Y-axis, the order book to fleet in percentage, so just to run through a few numbers, for example, 12,000 to 17,000 TU order book is around 60 to 80, let's say around 70% of the fleet on the water. The smaller the vessels, the lower the order book to fleet ratio becomes. On the X-axis, you can see the age profile. in terms of percentage of the fleet being above 20 years of age. And as you can see, 3,000 to 6,000 TU and 1,000 to 3,000 TU, intra-regional kind of tonnage that we are involved in is on the very right side. So we believe the supply and demand dynamics are extremely favorable. If you compare that with the order book and with the kind of current preparedness of the large liner companies in particular, and they could move the needle on the order book, but only they could move the needle in fact. that there is a significant requirement to continue to upsize or to increase the orders over the next three, four, five years. We believe conventional propulsion tonnage like our own existing tonnage is still very well positioned, but there will be more activity in this field going forward, and we believe this is a very positive kind of supply situation when it comes to the smaller vessel sizes. Let me continue with a company outlook on slide 15 here. And this is an illustration that we have used over the past quarter, so basically looking at the backlog. What we see here is that for 2023, the blue columns represent the operating days fixed and open. So for 2023, we have 86% of the days fixed. And 14% open, we have, and that's at the top of the column in the blue circle, we have $576 million in revenues contracted at an average TCE of around $32,000 per day. And we still have 14% of the days open. That obviously goes down over the years to come. So 2024, it's 57%, and 2025, 23%, and so forth. Overall, we look at a revenue backlog of around 1.5 billion and at a projected EBITDA backlog of around 1.1 billion. This is a very robust backlog, and we believe that is a very good foundation to continue to return capital to shareholders, but at the same time continue to grow and build the company. On the next slide, slide 16, we have looked at the upcoming open positions in 2023. This is the number of vessels. Obviously, depending on the charter duration fixed, we might have individual vessels coming open more than once in one year since periods have come down. But this is kind of a snapshot if you look at the number of vessels we have. Since the last update for Q3, which was mid-November last year, we have seen six shifts, four of which were 2023 positions, and we have illustrated those at the bottom right. Average rate on those pictures was around $15,500 to $16,000 per day, and the average period was six to eight months. Worth noting, that this goes from 1,200 tu's up to maybe Panamax 4,300 tu's. And what we have observed in particular with the February 2023 fixtures, that is reflecting basically the significantly increased activity. Also with O&E and MSE, for example, some of the large operators back at the table to take in additional tonnage capacity. And worth highlighting that, for example, the CPI was also a bit of a forward extension. So I'm not saying we're back to the same level that we've seen in 2022 in terms of forward extensions in Q1 that year. But what we do see is a way more active requirement list of the liner operators and fixtures where we see still solid rates, also in historical context, and also periods. Now to the charter backlog, we obviously see currently, as I've stressed in the market section, a development where freight rates have come down. Having said that, the top liner companies in particular, but most of the liner companies in general, operators in general, have a very healthy balance sheet, very strong cash positions, basically net cash positions. Nevertheless, looking at our charter backlog, we have around almost three quarters of our revenue backlog with the top 20 liner companies. We have two thirds with the top 10 liner companies. And our backlog spans, on average, over roughly 2.2 years, which is also, in our view, a very good kind of short time span as this, from a pure de-risking standpoint, de-risks this backlog very, very quickly. Overall, we are very happy with the counterparty situation. Now, looking at the value proposition and also kind of upside potential of the company and we have looked at the current kind of de-risking of our enterprise value from left to right, net interest-bearing debt or net debt basically being in Q4 being around $30 million roughly. We have a market cap of roughly a shade below $800 million, looking at an enterprise value of $813 million. And if we then compare that with a projected EBITDA backlog alone, we see that there is a significant excess value above the current EV. And this kind of small de-risking bridge, so to say, does not cater for any residual value upside from the fleet on the water, which It's obviously 66 vessels. Yes, most of them still have charters, so the projected EBITDA backlog represents that to some extent. But, you know, in any event, we believe that the vessels will have a significant value. And if you look at the glass half empty, that's probably the recycling value. We certainly don't look at the glass half empty because we see that every charter that we conclude in this market adds EBITDA to the fleet, as we have just discussed when we looked at the most recent pictures. And looking at the charter-free value of our fleet today, according to Vessel's value, we are around $952 to $1 billion in value. So we see that there is a significant upside potential, while the downside is very well protected with the existing contract. Looking at some sensitivity. In terms of rate sensitivity, of course, with just a shade below 90% of the day six for 2023, the sensitivity is quite low when you look at the 2023 results. For 2024 and 2025, that increases, as can be observed on this graph when we look at on the top left operating revenues for 2023, 2024, 2025, according to a certain rate sensitivity as well as net profit. What we have used here is firstly the current market rates for our vessel basket, which is not much dissimilar to the Clarkson 10-year historical average, and we also looked at the 5-year historical average of Clarkson. And we have also looked at what that means in terms of the implied dividend yield applying our dividend policy. And that means in case of a five-year historical average, you are basically de-risking more than 100% of the current cap, market cap. And even at current rates or 10-year historical averages, a very significant part would be de-risked over the next three years alone when you look at the implied dividend yields. And on that note, I would like to hand over to Moritz to run you through some of our balance sheet considerations and the debt profile.

Thank you, Konstantin. The debt reduction or let's call it deleveraging of our balance sheet is key to us. We wanted to spend some more time on the debt profile going forward. As you can see, a significant repayment up until the end of 2024. By the end of 2023, we have projected with a gross debt number of $80 million. That is roughly $1.5 million per ship in the fleet, which is a very conservative level in our view. At the same time, Just wanted to illustrate the headroom that we have from a gross debt perspective to the recycling value of the entire fleet. Probably not the right measure to use given the fleet age profile, but just wanted to illustrate how conservatively levered the balance sheet is. So we will continue on that path, certainly. One caveat to make in that respect. It's probably that if we look at specific projects that have a very long-term cash flow attached, then we're willing to look at higher leverage. And in that connection, we're happy to report that we secured pre- and post-delivery financing for our two 5,500 EU ships that are being built in Hanjin in Korea. The financing remains subject to documentation. This is being worked on as we speak. But in this instance, we're obviously trying to capitalize the strong charge rate attached to the new buildings to incur a slightly higher debt relative to the secondhand trading fleet. Also, in this connection and looking at the hat room that we have between the growth debt and the recycling value of the fleet, we're currently exploring certain measures, so to speak, to see if we could implement or put in place certain bed instruments that would be helpful in context of the fleet optimization measures that we are envisaging for 2023 and 2024. And on that note, I'm handing back to Konstantin.

Thank you, Moritz. Just to conclude before we open the floor for questions on where we stand and the quick summary and the short outlook as well. Where do we stand today? We see continued strong financial and operational performance in 2022 and we expect to continue that in 2023. We look at a very low leverage Company industry low leverage, I would argue, with more than 50% of the fleet being unencumbered, i.e., high flexibility in the balance sheet, as also alluded to by Moritz. We continue to execute our strategy of continuous fleet optimization without compromising on a dilution of EPS or DPS. We always maintain a very strong focus on doing accretive transactions, as we have shown over the last couple of years. when optimizing the fleet or renewing the fleet. Of course the charter market has consolidated but it has consolidated in line with you know historical averages over the recent month and we have observed some positive signs including at least rate wise a bit of a flattening out if not bottoming out. In the midterm We clearly see, in particular for the supply side when it comes to the smaller vessels, meaning intra-regional tonnage, that we focus on a favorable supply development. We certainly believe that the order book is pretty much geared towards the large ships and provides for quite a positive trend when we look at our very segment. And lastly, looking forward, With our revenue backlog, we have a very solid visibility when it comes to our earnings for 2023 in any event, but even beyond. And with that and our balance sheet structure, we believe we are very well positioned to capture market opportunities as they arise on a selective basis and certainly continue our path of returning capital to investors for the time ahead. And with that, I would like to hand back to the operator and open the floor for questions.

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I will hand back to you for webcast questions.

Thank you, operator. There are a few questions through the web. And Moritz and I will answer them and go through. And I would like to start with a question of ,, which I will read out. Congratulations on another great result, finishing off the best financial year in the history of MPCC. Can you elaborate on the more long-term situation, long-term plan for the company? What would be the main priorities in different phases of the business cycle? Of course, a highly relevant question, Frode, and as we have, you know, done over the last six years, basically, we try to always be very prudent and rational in when we allocate our capital on new projects and when we rather, you know, keep our feet still and basically roll out our, in that sense, chartering and portfolio strategy. As we have done last year with a very significant dividend yield, we have placed a clear focus on returning capital to investors. We believe the current backlog is still a very good fundament to continue to execute on the strategy of returning capital to investors. Yet, given the and Moritz went through the cash flow bridge for last year, given our ability to not just only pay dividends, but at the same time, deleverage the company further and also make use of opportunities, we will continue to selectively also optimize the portfolio by buying ships if the risk profile is right and if we believe, like the ones that we bought earlier this year, the second-hand vessels, we believe it will add and be accretive on an EPS and also DPS basis. Similarly, with the new buildings, we have seen that the new buildings that we have done have been what I would call rational new buildings, i.e., construction CapEx being fully de-risked through the charter that we concluded simultaneously. These deals are obviously not out there in the market on a daily basis. You need to work on them, you need to develop them, and we will take selective steps when it comes to potential new builds, always being aware of the market environment, of course. So we will continue to act rationally in the different phases of the container market. We believe we have taken the right steps so far and we will continue to act rationally accordingly, taking very sound capital allocation decisions as we move forward. There's a second question. Talking about supply-demand balance, saying, in the report, the future outlook for the supply-demand balance shows quite an encouraging outlook for the years to come. Does this consider the effect of the different environmental regulations coming up? And then Breckage, which, in the presentation, estimated the decreased effect of supply in inter-regional trade by around 11 percent. We did not imply by the figures that we provided that this would be the active supply impact on all intra-regional trade. We have rather seen that there are certain trades where there is such an impact already. As I alluded to during the market presentation, we have seen slower speeds through the Clark Index on a global scale and very specifically on our fleet on an intra-regional scale. But, as I said, we believe this does not yet factor in potential shift or change in schedules and port rotations, et cetera, by the liner companies. Certainly, the 2M alliance resolution will also add to at least a less efficient market in our view. It will be interesting to see how that will play out. In general, we certainly believe that the supply side will be affected in a sustainable way, meaning slower speeds in the months and quarters and years ahead. There is another question which relates to share buybacks. The company has delivered quite substantially with regard to both recurring and event-driven distributions during the last 12-13 months. Will there be a shift in companies' priorities towards share buybacks once the share premium account is emptied? Of course, that is a highly relevant question as well. We have established the dividend policy early last year, which also gives room for share buyback. We will, of course, continue what is in the best interest of our shareholders if there are certain benefits from acting opportunistically on share buybacks, for example, and also on the structured way. As I have mentioned in previous calls, for the recurring distribution on a quarterly basis, we would potentially rather maintain the dividend structure, but in case of vessel sales, we might also opt for share buybacks. Next question is whether MPCC will rather be a seller or a buyer of vessels in the quarters I think, you know, the market is extremely volatile and it would probably be challenging to already today give a clear indication for kind of all the quarters ahead. What we have seen, for example, in this quarter, so the first quarter in 2023, that we have been both a buyer and a seller of vessels. And I think that boils down to the question of optimizing the portfolio. Optimizing does not necessarily always mean uh making the fleet younger it certainly is one aspect of it but it is also making the fleet fit for what is ahead and and that means new regulation that means certain trades that means fuel consumptions that means stocking cycles etc so we will constantly seek to improve the portfolio composition, and we will act potentially as a buyer and a seller in this market environment. Having said that, if we're on the buying side, we would always maintain a kind of rational approach in terms of not ordering speculative new builds, for example. We will always stick to our kind of principles of de-risking the investment over a certain period of time or have a solid de-risking profile at least. And that's what we will continue to do. And then obviously also covering the next question, which is in relation to our joint venture, which has come down in terms of number of vessels. There's a question about the the future plans on the joint venture, whether there are any plans of buying new or selling vessels. Our joint venture partner is a party that is probably more on the divesting path at present. The joint venture has a lot of history, obviously, because it was one of the first vessels that we bought in this joint venture. It's not a strategic joint venture as such, and I would rather expect the joint venture to be, I wouldn't say wound down, but to be reduced in terms of number of vessels than growing. The next question, Robert Morris, is probably more for you, if you would like to take over, please.

Yes. The next question relates to... to a debt repayment postponement that we announced with the quarterly report. The report states that in February 23, the group postponed the US dollar 50 million repayment of its 70 million three-year revolving credit facility by six months to July 23. What's the reason for this? Is it linked to the delivery of the new vessels here at Cai and Hilton Towers? Yes, that is correct. It is linked to the acquisition of those two second-hand ships. I think important to mention that Looking at the entire balance sheet, there's ample liquidity available. But during Q1, there was a lot of, so to speak, cash events and uncertainty towards the timing of those events. So as conservative as we are, we simply wanted to postpone those with about a 15-day repayment by six months to be on a safe side when it comes to dividend payments, but also the best of acquisitions.

Okay, there's one more question relating to fleet employment overview. The fleet employment overview for Q4 2022 shows in part significantly higher pictures above HAPEX index prices, two times higher. Some of these contract periods go into 2025. Are these contracts linked to the HAPEX index? How high is the probability of renegotiation? What measures are being taken against this? What happens if charterers become insolvent? Is this risk covered? How quickly can the vessels be put into the service of other charterers? Well, of course, the counterparty risk, that's why we spent a slide on it in this market environment with our backlog. Counterparty risk is probably the single most relevant risk when you look at the, let's say, sustainability of our backlog. But as I mentioned, we believe the line of companies, they have never been in better shape in history. I mean, we have seen very solid years. The past two years, we still see, as I mentioned, basically net cash positions of most of these. So in general, we feel very comfortable with the, let's say, financial situation. stability of our counterparts. Now, there's kind of a nuanced question, if I get that right. It's the question of renegotiations and measures are taken against it, obviously, and what happens if the Charter has become insolvent. Obviously, we have a contract and history has shown that these contracts are at least legally extremely stable and extremely reliable. Renegotiations have been seen post-COVID, but the lineups back then were in a completely different We have obviously seen some niche players, newcomers to the, let's say, operator market over the last couple of quarters being a bit under pressure. Having said that, and that's why we spent some time on the various slides for our counterparties, we believe we have a very solid set of counterparties. We do not see any risk, and we haven't been approached on any renegotiation so far, and therefore we believe the combination of solid counterparties and the contractual relationship makes us very comfortable in terms of counterparty risk. There's another question to it regarding fleet optimization. The sale of RS Cleopatra should already be completed or about to be, according to the fleet employment overview and Q3 2022 presentation. RS Cleopatra has a contract until August 2024. What has happened to this contract? Was it part of the deal? Yes, of course. The vessel was sold with a charter attached. That's why we have been able to generate a very attractive price, so the vessel was sold with the charter attached yielding a very good or bringing forward very solid cash flows for us, which have been considered in the event-driven distribution that has been paid out this very day. There is another question from Christopher for the nine vessels coming open in 2023, which have not been chartered out. How is the interest among charters for these vessels? Is it possible to fix forward the open Q2 and Q3 positions already? And how are you balancing duration versus rate levels when you're negotiating with charters? As I mentioned earlier, the IS Cypriot was the first vessel where we were a bit in a more forward-fixing mode. Again, that was, I would say, not unique, but it's not standard to forward-fix vessels in this market. We basically fix vessels as they roll off charters. between zero and 30 days before the roll of charters. That is the usual market in which we move forward today. We don't have any specific dialogues. We actually had one or two dialogues on some forward positions recently, but nothing that I would say we can fix tomorrow. As I mentioned in the presentation, the charter requirements and the dialogue has increased in activity, but that doesn't mean we can forward fix any of the nine positions tomorrow. And in terms of balancing duration versus rate levels, of course, that is a combination of things. Obviously, number of requirements, counterparty, and it also means for what kind of service do the liners want to operate these facets. So we basically see some requirements being more on the short-term end of things. two to four months maybe, and some are longer. So we would continue to up for longer, obviously always looking also at the overall staggered charter portfolio book that we have as a group. But we would lock in maximizing our EBITDA at this stage. Another question relates to alternative fuels. Are you considering the use of rotor ships in the future? Well, I mean, this is obviously something that we look at all kinds of things. Rotor ships are certainly not on the radar at this stage, but we obviously spend quite some time in improving it and improving the potential profile of our own ships, but rotor ships is nothing that we would consider at this stage.

There's one more question here.

Can you elaborate more on your two acquisitions, especially how you look at the vessels after the expiry of current contracts? What kind of earnings have you assumed on new contracts? Should we expect you to do similar transactions going forward? Well, these vessels, as we have communicated and also when we made the announcement, had a few specific features. First of all, very favorable dry dock position, i.e. no capex in the years to come. Equipped with scrubbers, we believe the element of scrubbers is very favorable at the moment in the charter market. The benefit for liner customers on those vessels is somewhere between $5,500 and $6,500 per day, given the current spread and the trading profile. The vessels have a very favorable profit-sharing arrangement, and we believe that, you know, When the recharging will take place in the future of these vessels, we believe that there is a very high likelihood that we get compensated for the scrubber element. We believe the scrubber element alone has a very significant upside potential and at the same time downside protection and hence a very solid likelihood of the vessels being recharged at good rates. Looking at the overall portfolio, also a measure where we have increased overall TU size, which we believe will also be favorable going forward. And as I mentioned, this grub element and the slightly younger vintage were the decisive factors. Will we do more deals of that nature? We will see, and if the de-risking is, you know, something that works well, then we would consider it, but we have no rush to buy nor to sell vessels. We are in a very comfortable position and we would take it step by step in each case, either being a buyer or seller of vessels in our fleet. So, let's look at the next question, referring to the favorable order book perspective for smaller shifts. To what degree do you see this threatened by larger older tonnage possibly moving into MPCC segments as cascading effects when the larger new tonnage starts to arrive into the market? I think to look at this picture, it is important to understand how, for example, intra-regional trades operate. It's certainly not the largest sub-trade when looking at TU, but in terms of number of vessels, it is the single largest market globally. You have roughly 50% of the number of vessels sale on intra-regional trades. And on these intra-regional trades, you have around 98% of the vessels smaller than 5,000 TU. And that has happened over the last 10 years. So there has been no significant cascading into those straits. Does that mean I would rule that out going forward? I would probably not rule that out. But there are physical, and that means draft and port infrastructure restrictions and port sites and berth length restrictions, et cetera, that limit the effect of cascading. So there will never be a perfect cascade down to the very small ships in my book. And secondly, there are also... let's say, more trade-specific and logistical constraints that prevent the perfect escape from happening. And that is related to port rotation, for example. You cannot maintain the same schedule, especially now with new services being opened. Of all the new services that are being opened, they are mainly smaller vessels, because you would usually always start trades with smaller vessels. So to maintain the same schedule with a larger vessel is basically impossible. That means there are limits to the perfect cascade and to cascading, and therefore we believe that there is a certain element of protection as also evidence, if you look at the history of the last 10, 15 years, when it comes to the risk of cascading. Another question, if you have $440 million in EBITDA this year, do you think MPCC will give a 30% dividend for financial year 2022? What about 2024 or at least answer for 2023? I must confess, I don't really understand the question. I think someone mixed up the numbers here. What can be said, and I mean, we have that on all the various slides, is that, you know, For example, slide eight, where we have illustrated the dividend yield, we have illustrated the math behind that dividend yield. So the reference data point is the stock price, 1st of January 2022. And then looking at all the dividends that have been paid and or declared, that gives a dividend yield of 47%. And we have shown a sensitivity as part of the slide, if you look at What was that slide? I think that was slide 19, where we looked at the sensitivity. We, of course, don't give a dividend yield guidance. What we give is context in terms of what would be the implied yield at certain rate assumptions, applying the dividend policy of the company. And that is visible on slide 19. So I would refer to that very slide. And that actually illustrates the potential sensitivity for 2023, 2024, and 2025. So I think that should answer the question. And there's another question on your illustration of HARPACs and secondhand values on slide 11. There's a great mismatch between those two indexes. Earlier, they kind of followed each other more closely, but now there's a gap. between the second-hand price index and the charter rate. What are your thoughts on vessel values going forward, especially with the fact that the feed growth in your segment is very low? First of all, there is a gap, and that gap has narrowed between let's say, second half of 2021 and, you know, first part of 2022, where we have seen also longer periods on the charter market. So determining an asset value was basically three years EBITDA, which was three-year contract that you could achieve at that point in time, plus grab. And that was also reflected by the second-hand price. So that gap closed. Now we're obviously back to a more shorter period market, and therefore the gap widened, as you will also see if you look at that chart for the periods prior to January 2021, for example, where the gap was, in general, slightly wider. And that obviously reflects the high uncertainty in the earnings when you have shorter charter periods. So I guess that it should serve as part of the answer in any event. I personally believe that the S&P prices should also follow somewhat the dynamics in the charter market, meaning if there's a flattening out, bottoming out, I would expect that we will also see no significant further drop in secondhand prices. Then next question. So I think your company has the most value and that is why you are capable to give us $10 dividends for this quarter, which is 8% dividend in one quarter. Why are you so undervalued at a 2.2 PE and with EBITDA backlog so huge versus enterprise value and you still have $900 million or so of shifts with pre-charter? Why is the market so blind to your value? You should be at two times a higher price. Do you agree? You know, we strongly believe that there are significant value potential and value upside while there is a significant low downside risk when you look at our company. And that's what we have also explained during the presentation. I think the issue here is that, you know, investors and the market looks at sectors and obviously the container sector has seen very difficult years between 2008 and basically 2020, 21. So a very long period of difficult markets. We have seen the best container market in history in 2021 and part of 2022. And I think now it's fighting its sentiment. It's worth highlighting and we continue to stress that not every company operating in the container market is the same in terms of risk profile, in terms of upside, in terms of valuation and downside protection. Therefore, I strongly agree that there is a significant value upside when you look at our company, not only compared to how the market values us, but also compared to other market participants. We have, I would say, a very simple valuation metric. We have locked in cash flows, so you would need to look at counterparty risk. We have a fleet that will have a value at the end of each charter. We believe that might have a significant value at the end of the charter. So we also agree that there is a significant upside in the valuation of the company. There's another question about our rates. Why do you expect the charter rates to increase from 2024 onwards again, I think we, as I mentioned, we have not stated that charter rates will increase. I do believe that charter rates will stabilize and will come back because I believe that over the past years ahead of the COVID crisis, let's say ahead of 2020, the cost of transportation was not reflected in the charter rates. I believe cost of transportation will continue to increase. I do believe that referring to the various comments on the supply side that we will continue to see a favorable supply side in particular on the smaller sizes. Of course, the demand side plays an important role and to predict the demand side is a bit of a crystal ball question, but it is certainly linked to also the macroeconomic development which at least we believe will continue to rebalance in 2024 in line with expected GDP development. So on the back of that, I think there will be a more nuanced view on charge rates, and that is why we believe that we'll be rebalancing also charge rates. And we can already today see a bottoming out or at least flattening out of charge rates at what is still above historical average levels.

The next one I hand over to Moritz.

Yeah, thank you. Next question is threefold. Number one, how is it looking for cost control inflation? Number two, will more ships be sold? And number three, what's the average age of the MPCC fleet? For number one, there's obviously... probably also referring to the OPEX in Q4, where we have seen some inflated numbers relative to Q3, but also relative to full year and last year. It's important to mention that there have been some one-off effects relating to COVID travel restrictions. I mean, COVID is almost over in the western part of the world, but in the eastern part of the world, especially in Asia, you still have COVID restrictions that are trickling down into higher OPEX, but our expectation is This is phasing out in 2023 and 2024, so our expectation is that crew travel cost is coming down. Otherwise, inflation is already baked into the OPEX budget for next year, especially in terms of loop oils and other line items. Number two. I think it's fair to say that we will be acting opportunistically. So again, referring to the fleet optimization that we talked about a lot today. We might be selling ships, we might be acquiring ships, but there's no vessels in the fleet that are earmarked for a specific sale date in 2023. Especially given where the charter market is currently heading, it's certainly more valuable for the company to keep vessels trading in the fleet despite their age. And handing over to number three, with that sentence, the current average age of the MPCC feed is around 15 and a half years, but that is excluding the new buildings that have been delivered in 24.

There's another question on sailing pattern. Do you see changes in sailing pattern as we see within drywall and tankers? having an influence on your business? That's the first part of the question. The second part is major relocations of the fleet to new routes and or geographies. As I mentioned before, what we have seen is quite a number of new feeder services being opened between October last year and February this year, 68 in total. which is a significant increase compared to a prior year figure, a similar period. So what we do see is that, especially with kind of a slightly different market environment now, also, you know, lower earnings or lower freight rates for the liner companies, we see more and more services being tested. Is that potentially a reflection of relocation of production and or, you know, In the end, some of the shippers or basically the producing companies to relocate production to be more resilient in their supply chain. We have seen certain trends with significant increase in volumes out of Vietnam, for example, with trade war in 2019 and obviously the whole COVID disruption of supply chains of various industries and companies that has added to that. So we do see a bit of a trend to relocation of production Is that a trend where I could already draw a conclusion and provide clear numbers? I guess that is slightly premature, but we do see certain trends to that effect, and I think the number of new feeder services I mentioned also in our call is proof to that. There's another question. Right now your dividends are classed as return of capital. How much longer do you suppose can this last before return of capital is not longer feasible? That is basically a similar question than the question around making use of the share premium account. So we have, I think, around 230 million ahead of the upcoming dividend, around 200, 230 million in capacity left. in the share premium account, but we will obviously, as I mentioned before, consider ways to make the best and most efficient structure to return capital to investors, potentially including also an element of share buyback. However, this is premature as we still have enough capacity left for the time being. So there is another question around private takeover similar to ATCO. Well, I guess time will tell. I think given the fact that we are significantly undervalued, this will be a costly exercise for whomever would want to do that. So I think this is a very special question, which at this stage I would not, I mean, we haven't been approached at least, to put it that way. Is there any more questions, I think? Operator, is there any questions through the line? I think we went through all the questions through the web at this stage.

There are no phone questions, sir.

Okay, then let's wait a couple of more seconds to see whether anything else is coming in. We obviously already have 70 minutes. Okay. There are no further questions. Operator, I would hand back to you to conclude the call and thank everyone for the interest and for participating. And we are excited about 2023. And there's certainly more to come from MPCC. And again, thanks for your participation.