2007

Backing up Diana

JP Morgan’s Jonathan Chappell, together with Glenn Muller and Darren Hicks, initiated coverage on Diana Shipping last week, endorsing the stock with an Overweight rating alleging the company is well positioned to pay sustainable and increasing dividends to investors.

Headquartered in Athens, Greece, the Simon Palios steered dry bulk shipping company consists of 13 panamax carriers and four capesize carriers (plus two newbuilds) aggregating 1.7 million deadweight tons in capacity and averaging just 3.1 years of age, by year’s end. The extensive fleet is currently 78% covered by time charters with a drop down to 43% in 2008. Chappell maintains that extensive time-charter coverage lends visibility and stability to the company’s near full-payout dividend strategy however the short-term nature of a majority of these contracts situates ‘Diana’ in a favorable position to receive the stronger rates forecasted in 2008 in consideration with the recent favorable dry bulk market these past two years. Moreover, short-term charters provide flexibility and the ability to better manage the cycle. Favorable industry fundamentals should support charter rates and asset valuations through at least 2008.

This is only an excerpt of Market Commentary – 05/17/2007

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.