Value Microcaps Motherboard

[abh3vt]

MCX out today with its Q2 earnings:
http://biz.yahoo.com/bw/050802/25620.html?.v=1

Earned 0.32 fd vs 0.06, with charterhire income up 18% y/y. This LPG shipper has transformed itself over the past year, selling off some ships and buying others. Its principal biz, LPG shipments, is stable and not subject to the wild fluctuation in rates that some Oil tankers face.

MCX also stabilizes its biz by doing longer-term charters and locking in rates. This has hurt in the past as its existing rates are below what it could currently get on the market.

Several ships will be coming up for renewal next year, as they come off their contracts, charter income should rise again. The company has guided for 1.35 fd for the FY05 (back in Q1); the stock is at 10.40...so trading at <8x forecasted eps. Reiterated guidance today:

"Tony Crawford, the CEO of the Company, commented on the second quarter results, "Following the delivery of the new vessels, our second quarter earnings have increased nicely and our policy of long term growth with stability will allow steady quarterly increase of the net income to continue, in line with our previous estimates".

Mr. Crawford added, "At the Company's most recent annual meeting, a number of Shareholders asked for half yearly valuations of the Company's fleet by independent brokers. Such a valuation in June 2005 appraised the fleet at approximately $43 million over its net book value. This equates to $4.8 per share that, together with current book values and deferred gains on vessels sales, translates into net assets value of comfortably more than $10 per share."

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Stock also pays a 2.4% cash dividend. I like its predictability and stability over the next 6-12 months. Not like other shippers I've come across. Still some value left here, as I expect it to trade up to at least 9x estimates (possibly higher). Other shippers are trading around 8x, but they are all expected to show declining growth next year.

MCX should still be able to grow as it replaces older charters with newer, more profitable ones.