MPC Container Ships ASA

OSE:MPCC

Earnings Call Transcript 2021-Q2

[Operator]

Good day, and thank you for standing by. Welcome to Q2 2021 Earnings Call. [Operator Instructions] I'd now like to hand the conference over to your speaker today, Constantin Baack. Please go ahead, sir.

[Constantin Baack, Chief Executive Officer]

Thank you, operator. Good afternoon and good morning, everyone. This is Constantin Baack. I'm the CEO of MPC Container Ships, and I would like to welcome you to our Q2 Earnings Call 2021. Thank you for joining us to discuss MPC Container Ships' second quarter earnings this morning. We have issued a stock market announcement covering MPCC's second quarter results for the period ending June 30, 2021. The release as well as the accompanying presentation for this conference call are available on the Investors & Media section of our website. Please be advised that the material provided and our discussion today contain both forward-looking statements as well as indicative figures. Actual results may differ materially from those stated or implied by forward-looking statements due to the risks and uncertainties associated with our business. Before I guide you through the presentation, let me start with a few opening remarks. The positive momentum in the container market is continuously strengthening, supported by very strong fundamentals, resulting in a further tightening of availability of ships. Due to the upward trend in global trades as well as growing inefficiencies in the logistical chains, there are no indications whatsoever of a weakening market before at least well into 2022. In these market conditions, we have completed a total of 42 fixtures this year. And with the acquisition of Songa Container AS, we have expanded our fleet by additional 11 vessels, locking in favorable rates and consequently improving our EBITDA backlog. We have a much enhanced cash flow visibility for 2021 and have, hence, raised our guidance. On that note, I would like to start with today's presentation, commencing with a brief recap on Q2 2021, followed by a market update and then an outlook on the main aspect going forward for 2021 and beyond. Turning to Slide 4. I would like to start by running through an executive summary with some key highlights and KPIs. It's worth noting that we are presently in historically strong freight and charter markets. The HARPEX index S1 indicator has increased by 200 -- in excess of 240% year-to-date. We'll get to more details on that as we go through the presentation. As I mentioned in my introductory remarks, we have a very high chartering activity, 42 fixtures, translating into more than $830 million in contracted revenues. That translates into a significant revenue and EBITDA backlog. And at the moment, we have an EBITDA backlog of around USD 500 million. In addition, we have executed what we think is a highly accretive and transformational acquisition by acquiring Songa Container AS with 11 vessels. This added $70 million in additional EBITDA backlog to our portfolio. Furthermore, as I indicated, we have revised our guidance for 2021 to $210 million to $215 million. This includes a profit from a sale of an asset, a 2,800 TEU containership of around $15 million, which is still in the process of being successfully finalized and executed. And last but not least, we have started with a balance sheet optimization program, where we have increased flexibility and extended maturities of certain loans by agreeing on a $70 million revolving credit facility in -- after the balance sheet date. I'll get to the bigger scheme of our balance sheet optimization program as we run through the presentation. Now let me start with some key highlights for the quarter. Please turn to Slide 5. At roughly $64 million net revenues in Q2 were around 25%, and hence, significantly above Q1 2021 levels. reflecting the rollover of charters and continuously improved charter market. Similarly, EBITDA came in at around $32 million, which is around 43% above the respective Q1 2022 figure. Average EBITDA per day and TCE as well as fleet utilization are currently very strong and underpin the positive market developments. Having said that, the COVID pandemic has continued to affect operations and, to some extent, also OpEx for Q2, notably in relation to crude changes of vessel deviations. However, overall, we are very happy with the operational performance of our fleet and the support of our seafarers despite certain COVID-related challenges. As per end of Q2, the company had a cash balance of around USD 46 million, and moreover, key balance sheet figures and KPIs have strengthened further with an equity ratio of just a shape below 60% and a moderate financial leverage of 38%. For further details on our Q2 2021 financials, please refer to the appendix of this presentation, Slide 21, in particular, or to our website under Q2 Financial Report. Now let's turn to Slide 6, please, where we provide an update on key developments and activity. Let's start off with the market. Global GDP and trade growth have been revised upwards due to the improved vaccination process, and we currently look at a GDP growth of 6% and a trade growth of around 5% for 2021. Very solid figures, especially after a very challenging year 2020. Looking at the container market, port congestions and other implications have accelerated the situation. However, that is all in combination with very strong market fundamentals, meaning, in particular, a very attractive supply-demand balance, we'll get to that as we go through the presentation in more detail. Charter and asset markets, very importantly, all key parameters such as fleet utilization, charter rates, charter periods have not just continued to improve during the first 8 months of this year, but they are at historically high levels. Asset values have been lagging behind. However, the gap has been closing lately, and we'll get to that as we go through the presentation. Looking at corporate and financial development year-to-date. We have issued our second ESG report in the late Q1, and we are fully committed to ESG and the IMO's climate ambition, including potential investments in our fleet. And I'll elaborate on that in more detail as we go through the presentation as well. Furthermore, we have commenced our balance sheet optimization by concluding, as I mentioned before, a highly flexible RCF. We believe the current market environment and our EBITDA backlog is a very solid fundament to further improve our balance sheet and optimize it to achieve our goals. Moving to the next slide, Slide 7, operations and portfolio summary year-to-date. So we touched on the operations and the portfolio. Let's start with some aspects on the fleet optimization. We have overall divested 4 vessels with an average capacity of 1,000 -- roughly 1,500 TEU and an average age of around 17 years, and at the same time, have acquired 12 vessels with an average capacity of 2,400 TEU at an average age of 12 years. So we have basically increased the average size whilst reducing the average age. Most recently, we have, as a 50% partner in our joint venture, Bluewater JV, we have agreed upon a sale of AS Cordelia for USD 39 million. And the net proceeds on our pro rata share will be around USD 15 million based on the sale being finalized and executed. Preparation for the upcoming annual 2030 regulation, a very important aspect. We have completed a very comprehensive impact analysis on a vessel-by-vessel basis for our whole fleet, together with DNV. At the same time, we have identified a number of measures and lined them up to ensure we enhance the performance of our fleet and achieve our very own sustainability goals. In addition, we are now carefully balancing our customer operational needs with IMO requirements to ensure us being a reliable partner to our customers. On the utilization side, we have had a very good year to date. We had some off-hire related to COVID deviations. But other than that, we're very happy with the overall utilization of around 98% year-to-date. Looking at the fixture activity, and I alluded to that earlier, you can see here quarter-by-quarter the dynamics that have evolved in the market, more specifically increasing rates, and at the same time, increasing periods. So whilst in Q1, average charter rate was $16,000 and the average period, 15 months. We are now at roughly mid-30s in terms of rates and around 3 years in terms of charter period if you look at the Q3 fixtures. Overall, 42 fixtures translated into a revenue backlog of around $830 million, and we believe we will continue to improve this going forward with the upcoming pictures that I will elaborate on soon. Now let's look forward to the market section, I would like to run you through a quick update on the market. So please turn to Slide #9. This slide shows the key indicators for ocean freight and charter markets. On the left-hand side, you see ocean freight volumes and freight rate index, the SCFI. So the dark line reflects the development of seaborne trades over time. Following a dip in 2020 as a result of COVID, we have seen a significant increase in 2021 in very solid levels. At the same time, the freight rates have increased significantly, as you can see from the red line. At the same time, when looking at the charter market on the right-hand side, not the similar picture, the dark line reflects the idle fleet being at a very, very low. And not just that a low, but also we expect it to stay low given the charter durations that have been fixed on a number of vessels, and we'll get to that in a minute. And at the same time, the HARPEX, the time charter rate index, is at an all-time high. Let's go to Slide #10 to look a bit more in detail at time charter rates and asset values. The time charter rates have continued to surge, as you can see on the top left. And on the top right, you can also see that asset prices have followed. At the same time, we have seen quite a significant activity in the S&P market, which is the light blue columns in the back of the graph on the top right. We are currently basically at a very, very high point in the history when it comes to asset values and charter rates. Over the last quarters, we have always compared asset values to charter values. And as we have explained, we have often opted for fixing vessels for longer periods in order to crystallize value for the company and for our shareholders. If you look at the chart at the bottom left, you can see that charter rates and asset prices, the gap is slowly closing. We had quite a significant lagging behind of the actual asset value compared to the charter value of the ship. And that is also why we believe, for example, on slightly older ships, it is an option as we have done with the Cordelia to at least explore potential sale of assets in order to generate the best outcome for the company and for our shareholders. Now let's look at the another aspect of the charter market being very specifically next to rates, the periods. On the top left, you see the periods and the redelivery spreads, redelivery spreads have tightened significantly, whilst periods have gone up quite a bit. And this is for vessels between 1,000 and 5,000 TEU, i.e., for our size bracket according to Clarksons. At the same time, if you look at vessel availability due to the fact that vessels get fixed for longer and longer periods, they are unavailable to the charter market. And that is actually reflected at the top right, where you see the average start of the year vessel availability over the last 3 years has been somewhere in the vicinity of 1,500 vessels. Now, today, you look at around 800 until the rest of the year. And it is expected that we have only 1/3 of that volume, of the 1,500 that we had on average, going into 2022, which gives you an idea that 66% of the vessels that are usually up for charter are gone for longer periods on charter. At the same time, we are in a market that is -- where the supply chains are under significant stress. We have seen a lot of disruption, port closures recently in Ningbo on the terminal side, but also the incident of the Ever Given caused significant congestions on the West Coast of the U.S. making the market extremely challenging and reliability of operators very low. Only less than every second box actually gets on-time delivered in today's market. Now moving forward to supply and demand dynamics on Slide 12. On the left-hand side, you see the total market, blue line is the supply growth, red line is the demand growth. And we see following a very challenging year 2020 with COVID and its implications on the demand side. We actually see a significant rebalancing of supply and demand for the overall market for 2021, same as expected for 2022. If we then look more specifically at the situation in the intra-regional trades, those trades where our vessels are employed, you see that especially the demand development is expected to be higher, but also the supply side looks more favorable for that segment, and we'll elaborate on that in a bit more detail on the next few slides. Looking at intra-regional trades and demand growth compared to the overall market. At the bottom of the slide, you see the development of intra-regional trades, demand growth following the dip in 2020 compared to TEU demand on the main whole trade. Very importantly, it is to note that 97% of the vessels employed in intra-regional trades are actually below 5,000 TEU, i.e., our fleet profile fits very well into the intra-regional trades, where we see significantly higher growth for the next few years. Looking at the order book, an aspect that has obviously been a very important factor over the last 9 months. We have seen a significant increase in order book, the total order book and then order book to fleet ratio. We're now somewhere between 21% and 22% of order book to fleet. However, the vast majority of that is geared towards vessels above 12,000 TEU and actually above 15,000 TEU for the most of it. That is now seen in conjunction with the individual age profile, in particular of the smaller sizes, where we operate, you will see that roughly 40% of the fleet is about 15 years of age, meaning whilst the order book is slim, the age profile actually suggests that we need more orders also in the smaller sizes. We believe that whilst the order book is -- has increased significantly for the larger sizes, it is something where we actually need more orders going forward in the smaller sizes. Now let me now wrap up my presentation with a short company outlook on Slide 16. Just to recap, our market positioning. We are the largest tonnage provider for intra-regional trades. We have 75 vessels, operated capacity of more than 150,000 TEU, and our average age is 14 years of age. You can see the trading areas where our vessels are deployed at the bottom left on the map, and we operate between 1,000 and 5,000 TEU vessels. As I said, all of these vessels are employed in intra-regional trades. Now let's look at some numbers as well, exposure and fixed revenues. The top left shows the Q1, Q2, Q3, Q4 2021 existing operating days, fixed operating days and open operating days. For this year, we have roughly 4% to 5% of operating days still available and nonfixed. We have fixed revenues of around $330 million. And for next year, we have roughly fixed 58 days already to date or around $300 million in revenues. For 2023 and 2024, also the visibility is increasing basically with each fixture. We're usually fixing vessels in today's market for a 3-year period across sizes. Looking at the bottom right and the upcoming charter renewals. We have another 16 vessels coming up for charter in the course of this year. if these vessels would be fixed out at current rate levels and periods, this would translate in an additional revenue backlog of around $330 million and additional EBITDA backlog of around $260 million if the market stays as it is. And similar figures can be assumed if the market continues for our Q1 and Q2 fixtures, another 15 vessels, we would also be looking at today's rate and period levels at around $320 million in revenues and $260 million in EBITDA. Of course, with a more significant EBITDA and revenue backlog, we are shifting away from last year's employment uncertainties and covenant and liquidity focus to counterparty risk and focus. We have been very detailed in identifying the right parties for our charters. We have our own risk analysis. First of all, the liner companies currently earn a lot of money. And actually, a lot of them are delevering their balance sheet, which is also something that we will -- we intend to do in optimizing our balance sheet. And at the same time, roughly 80% of our contracted volume is with what we deem A accounts, and that doesn't necessarily mean official external credit rating, but our own rating on those counterparties. Looking at some sensitivity for 2022, and this is just an illustration and should please not be considered guidance by any means. We come from the first half cash breakeven on the left-hand side, roughly $7,700 total cash breakeven. We have around $300 million in already contracted revenues for next year. And if we would then apply on the right-hand side for the open days, which is 42% open days at present, if we would apply the 20-year average from Clarksons, which is $12,500 per day, we would look at an EBITDA for next year of USD 260 million. And if we look at current spot rates of around $38,000 for our vessel basket, we would be looking at an EBITDA of around $500 million. This is just to show you the sensitivity. I by no means believe that the rates will drop anytime soon to levels of $12,500. But this gives you an idea of the sensitivity of the open positions for the rest of this year and next year as far as our 2022 results and EBITDA is concerned. To wrap up my presentation and then open the floor for questions and hopefully having a good discussion, I would like to communicate our priorities for the rest of this year. Of course, as a continuous positive momentum in the container market, as we have explained. It's a mix between strong fundamentals and additional inefficiencies and logistical change, both of which, in our view, suggests that there is no indication for weakening of the market well into 2022, which is, in our view, very positive and sets a very good fundament for developing our business further. Furthermore, the fleet, the employment strategy, we will continue to execute our chartering strategy to lock in attractive rates and periods in an improving charter rate environment and enhance our EBITDA and revenue backlog. We will, of course, also follow our strategy and focusing on intra-regional trades. Finally, and very importantly, and I have alluded to that on a few occasions in this presentation, our balance sheet. We intend to maintain a moderate leverage, moderate to low leverage strategy, and we will continue to optimize our financing structure to achieve an efficient balance sheet structure going forward in order to position the company on that basis once we optimized our balance sheet to be in a position to pay out a dividend in 2022. And the idea is following the execution of our balance sheet optimization to aim for a dividend of up to 75% of net profits as from 2022 onwards. Having said that, there are a few priorities that we need and want to work on in the course of the next couple of months towards the end. And on that note, operator, I'm very happy to hand over back to you, and I'm looking forward to questions.

[Operator]

[Operator Instructions] And your first question comes from the line of Frode Mørkedal.

[Frode Morkedal, Managing Director]

Yes. Firstly, I'm sorry if you probably touched upon it earlier, but I came in a bit late. But this Songa transaction, you didn't have any revenue from that in Q2, right, it seems. And I'm curious how you are confident going forward in Q3 because it seems like you were supposed to get revenue from that from May 31, if I'm not mistaken.

[Constantin Baack, Chief Executive Officer]

Yes, Frode, thanks for your question. And first of all, the Songa deal was signed and agreed on an end-of-May basis. However, we will only do the first consolidation in our books at closing, which was the 9th of August. So there are no kind of P&L implications in -- or no balance sheet implications either in our Q2 report. We will, as of August, continue incorporate also the revenue streams from Songa. But we obviously have the earnings between end of May until August, that will be booked by the equity as part of the first consolidation of the Songa company. But as of early August, we will have also revenues and balance sheet contributions from Songa. And we expect for this year roughly $22 million to $24 million in EBITDA contribution from Songa for this year.

[Frode Morkedal, Managing Director]

Okay. Yes. So then the EBITDA relation you just mentioned on Page 18. What would you consider 3-year charter adjusted rate there? Because if you see current spot rates, I assume that is a 1-year charter. What would be the 3-year equivalent?

[Constantin Baack, Chief Executive Officer]

Well -- I mean, I give you a few examples, the 1,700s and the 1,300s, you fix these days for $30,000 for 3 years. And to age, you fix for $40,000. So the 3 year -- this is not far off a 3-year rate, the spot rate. So this is probably a 2- to 3-year rate. 3-year rate on average would probably be $32,000.

[Frode Morkedal, Managing Director]

Okay. And do you know what [ EBITDA ]? would that be $32,000?

[Constantin Baack, Chief Executive Officer]

On $32,000, you would probably be at that $460 million.

[Frode Morkedal, Managing Director]

Exactly. So that seems quite likely. Yes, seems quite likely, right? But you have already fixed 6% to 8% of 2022, and based on the upcoming charter renewals you just showed, majority of those will be fixed later this year and into next -- early next year, right? So...

[Constantin Baack, Chief Executive Officer]

I would...

[Frode Morkedal, Managing Director]

So if we count them by end of this year, what type of percentage will you expect for 2022?

[Constantin Baack, Chief Executive Officer]

I expect by Q4, towards the end of Q4, that we will have like 80% at least for the next year already fixed. So we will have a very solid picture as far as 2022 is concerned towards Q4. And looking at the periods that we are able to fix, we will also have a very, very improved visibility for 2023, right? And I'm not sure whether you heard me mentioning the numbers, when you look at the upcoming charter renewals, right, 16 vessels today. At today's rates and periods, that would be roughly $330 million in revenues and roughly $260 million in EBITDA for the fixtures that are still upcoming, Q3, Q4. And that's obviously over a general 3-year period. And roughly the same number would apply for the Q1, Q2 positions next year if the market stays where it is.

[Frode Morkedal, Managing Director]

Yes, exactly. And it seems like you believe that, that will last well into 2022?

[Constantin Baack, Chief Executive Officer]

Well, at least I have no indication to think why it should smoothen anytime soon, right? I mean assets ask us, we have a much lower availability and volumes are high. We have an additional congestion and supply chain disruptions. So I think at least most other points suggest that this will stay a tight market when it comes to assets going well into 2022.

[Frode Morkedal, Managing Director]

Yes. Very good. And on that dividend policy of 75%, how do you arrive at 75%? If you have any color on that?

[Constantin Baack, Chief Executive Officer]

Yes. It's -- I mean, we -- and I appreciate that we put a lot of disclaimers, and the reason being that we still have to and want to optimize our balance sheet as a starter. So it is not the kind of formal and final dividend policy. That we will communicate once we have taken certain additional balance sheet optimization measures, which we are working on as we speak, which we expect to have completed latest by the end of this year. And we will then be more concrete and very specific as far as the dividend policy is concerned. But the idea is to dividend out a significant part, and that's why we said up to 75% of our net profits in the years ahead in light of the fixing activity, the high visibility of cash flows and with the ultimate goal to return capital to investors.

[Frode Morkedal, Managing Director]

And what kind of specific steps do you need to take in order to reach dividend position?

[Constantin Baack, Chief Executive Officer]

Well, it's more optimizing the balance sheet. We have, in our view, in this market with a significant EBITDA backlog. We can more optimal utilize our assets and our cash flows in order to generate value for the company. In my view, currently on the credit side, for example, the bond is very well secured with 37 assets and the 37 vessels and a significant EBITDA backlog. Way more EBITDA backlog than outstanding debt and the scrap value protections alone of $130 million. So I believe we can optimize the different pools and bring a balance sheet structure in place that enables us to be very flexible to achieve also unencumbered vessels and to be in a position to we have a high degree of discretion about our capital allocation decisions going forward. And that is what we intend to achieve. And that is what we are working on with the ultimate goal in getting that in place by the end of this year.

[Frode Morkedal, Managing Director]

Yes. Great. Sounds good. So based on the 3-year time charter EBITDA you just mentioned, the $460 million, that would basically being NOK 8 EPS, right? And NOK 6 dividend potentially, if you pay out 75%. So I hope you get there.

[Operator]

And your next question comes from the line of Eirik Haavaldsen.

[Eirik Haavaldsen, Head of Research]

Just first on the duration of the fixtures because I think we're seeing -- we've seen duration come up to 3 years, and it's been fairly stable, but I believe we're also seeing now some initial signs of even longer fixtures. Is that something you expect to see for a 5-year duration or even more? Because I guess we're all kind of confident in 2022 and 2023 and maybe 2024. But beyond that, there's still uncertainty, right? So the duration here is -- are you seeing something more there to say?

[Constantin Baack, Chief Executive Officer]

I mean we have seen basically a step-up over the last 9 months, right? It started for the larger vessels in our brackets, 12 months, then we all of a sudden, saw higher rates and even longer periods. And there's clearly a push. And I wouldn't be surprised if, for example, for the larger part of our fleet, so above 2,000 TEU, we will, at some point, see a full year period. It hasn't been the case throughout the bench. There have been a few selective fixtures that go slightly longer. But currently the established period is still 3 years. But again, it has jumped sometimes even overnight that 1 year is added. And that is also how the asset prices have actually increased further and further, right? Because you're basically seeing 1 year being added. And the moment you have a fourth year added at a similar rate, for example, 2,800 TEU containership, the value should be well above $40 million then, for whatever, 15, 18, 20-year-old ship. So to your question, I wouldn't rule it out. We haven't seen it throughout the bench, but there's clearly, at the moment, a push for longer periods, and maybe we see a 4-year period in the not too decent future. But I would not guarantee that obviously.

[Eirik Haavaldsen, Head of Research]

Okay. And the divestments you made with your partner, is that your -- was that your partner's decision? Was it your decision? Or are you 100% agreeing that, that was the right thing to do?

[Constantin Baack, Chief Executive Officer]

It's always good to have partners that 100% agree. In this case, we -- it is a matter of the docking position of the vessel, the age of the vessel, the ability to get a deal done at these price levels, and it was in 100% agreement with our partner. But that doesn't mean that all ships should be sold. It really is an individual decision linked to charter position, docking position and age profile. And the ability to actually sell this vessel at this price. We bought it back in 2017 for $6 million. So there's a significant uplift. And we believe in this specific instance, it was a good decision to enter into a sale.

[Eirik Haavaldsen, Head of Research]

And then finally, you mentioned that more newbuilds are needed in the feeder segment. Is that what remaining 25% of your earnings is going to be allocated to? Or can you rule that out?

[Constantin Baack, Chief Executive Officer]

No, at the moment, obviously, we look at everything because we are in the shipping space, right? I mean, you should never close your eyes from any opportunities. Having said that, I personally think it's always good to sit with some sort of a unique element. And I think the most unique element in container shipping at the moment is secondhand ships on the water being available to our customers, and that's where you actually get the extra mile. On a newbuild, it's all about cost of capital. It's -- it doesn't really make sense at this stage from our perspective. We believe that -- and that's why we are also pretty straight on saying we want to return capital to investors as of next year, following an optimization of the balance sheet. And that is how we see the newbuilding side of things. So focus on implementing our chartering strategy, possibly optimizing the fleet here and there as we did throughout this year. But certainly through them in this market also return capital to investors.

[Operator]

There are no further questions at the moment. Please continue.

[Constantin Baack, Chief Executive Officer]

Okay. There are quite a few questions through the web. I would read them out. There's 1 question from [indiscernible], who says -- I'll read it out, I'm impressed with the operation of the company, but I have 2 questions. Firstly, as far as I have seen, none of the company ships have gotten longer charter parties of longer than 36 months despite the charter rates moving northwards during the recent quarter. Have you registered any movement in the charter periods recently? I think I answered that when Eirik raised that question. So there is potentially a trend that we have been able to fix 3 years. We would consider longer periods if available at attractive rates. Secondly, do you have any color to add on the refinancing of your bonds and other debt? As I said during my presentation, there is clearly a in our view, a possibility to optimize the whole collateral structure, to simplify the balance sheet structure and this is what we're aiming for. And there's not more to report at this stage other than that we are confident on the basis of our EBITDA backlog and the improved market dynamics to be able to improve the balance sheet until the year-end in order to position the company to pay dividends. [ Olaf Mailing ] raised the question food vessel seems rather low compared to new context rates. What is your estimate for average rate for food vessels in 2022 based on market today? There is -- that's a good question. The pool has been lagging behind because the charters running into this year, had a different duration than the rest of the fleet. It's a bigger pool. So the pool is good in a more challenging market. It needs longer times to adapt to a better market. For next year, we clearly see significant uplift in pool rates because we will have digested all the, I would say, legacy charters from last year. And to give you an example, the 1,300 TEU vessels, the ones that we fix today, we fixed them somewhere between $25,000 and $30,000 for up to 3 years. So at the moment, that rollover has been basically finalized, we would be looking at rates certainly north of $20,000, if not $25,000, for next year. [indiscernible], size of dividend in 2022? Well, I mentioned earlier that we have a set of priorities. The key priority is to bring the balance sheet optimization program into place. And then we will be clear on dividend. The clear target is 75% of net profit, and Frode was just a minute ago kind enough to run through the numbers. So 75% of net profit for next year. And I would then refer to the analyst reports, we certainly have a good read on our net profit for next year. [indiscernible] asks if the rates for some reason suddenly go down into 2020 levels, do your customers have any chance to renegotiate their contracts? There's not a legal path to renegotiate contracts. So the contracts are contracts and are firm. Having said that, obviously, there have been times in the past post the financial crisis, where renegotiation of contracts took place. Looking at the counterparties at the moment, and looking at people like Maersk and Hapag and Costco, our key customers and CMA. I mean, Maersk will earn around $20 billion this year. So all of these guys are also significantly delevering their balance sheet. So I would argue the whole industry is in a much better shape than it was post the financial crisis. And therefore, yes, counterparty risk, as I mentioned, is a risk, but I think we are able to handle it properly, and I think the industry is in pretty good shape. And other players in the market, especially the liners, are delevering their balance sheet as well. There's a question by [indiscernible]. He will say will there be a focus on establishing 24- to 26-months contracts for all vessels in the next years? Or will you chase better earnings in the spot market even though you will reduce the level of predictability? As you might guess, my evaluation is that predictability is better than upping earnings. Well, we have taken the opportunity to chart a few vessels short, that was more linked to specific dry dock positions. And if you look at Slide 17, where we have shown the upcoming charter renewals, you'll see that by virtue of kind of our charter positions and dry dock positions, we do have a staggered charter book. So it's not that all the vessels will -- tomorrow be fixed for 3 years and then we have no further market exposure. Having said that, we want to go long. We want to lock in the cash flows, we believe that will support value of the company and for shareholders. And therefore, our strategy will remain to lock in interesting cash flows. Next question by [indiscernible]. Any thoughts about current stock price? Do you think the current stock price reflects the company value based on future cash flows? I think there are significant upside in the stock. If you look at the kind of sensitivity on EBITDA for the next 2 to 3 years, and we ran through that with Frode earlier. At today's rates, we would be looking at EBITDA for next year of $500 million. The year thereafter, $500 million to $600 million. So Both through EBITDA, the loan plus scrap already represent the market cap of the company, right? So I think -- and then the vessels are on average 16, 17 years old. I believe the vessels would trade at least until '25. We will continue to, if needed, also invest in these vessels. And we believe there's a significant upside beyond that time window, especially given the supply and demand dynamics and the limited order book of -- in our size bracket. Next question from [indiscernible]. Since you're confident in a strong market until late 2022, why don't you go for shorter periods for higher rates? I think I have addressed that in my previous question. Next question is from [indiscernible]. What are your views on further M&A activity for MPCC using your share as currency? Of course, I believe -- I personally believe the Songa transaction was a very accretive transaction to our company and to our shareholders. Because we have been able to basically benefit from lagging behind of asset prices versus charter rates. In our view, when we concluded the deal, the asset prices were lagging behind, whilst the charter values were already higher. And therefore, we have been able to execute a transaction that is highly accretive to shareholders. Having said that, it is certainly possible to explore further M&A activity. It always has to be accretive on an EPS basis. We would be looking at it. But first of all, as I said, we have a priority to now optimize the balance sheet structure, but then also to be able to potentially take opportunities. Question from [indiscernible]. Can you fix charters today on ships whose charters end through first half 2022? This seems to be what Danaos has done recently. Yes, there are discussions on certain forward positions. The Danaos vessels are slightly larger that has been fixed on that basis. There is clearly the possibility to also enter into forward discussions. We have been approached by charterers on a selective basis already for 2022 positions, and I'm not talking generally. But it's not available throughout the bench. But I would not rule that out, especially in light of what I said earlier on scarcity of assets and reduced vessel availability that we already foresee now for early 2022. [indiscernible] raised the question, are you satisfied with your current share price? Well, there's always room for improvement. And as I mentioned, I think, on the back of EBITDA expectations, assuming that the market will continue strong over the next quarters, I believe there is significant upside. And hence, that upside should actually be reflected in the share price going forward. With returning capital to investors and the commitments, first of all, to optimize the balance sheet and then to go for dividends as of 2022. I'm sure people will appreciate a revaluation of the stock going forward. [indiscernible] raised the question, please say some words about plans to go zero emission green and also possible investments to do so, and will this impact the decision to pay dividends next year? This will not affect the decision on dividends. As I mentioned during the presentation, as part of our internal IMO 2030 and ESG project, we have analyzed each individual vessel, identified measures, potential investments that are needed in order to comply with also the CII requirements over the next years as of 2023 onwards. Our kind of expected CapEx -- maximum expected CapEx related to that is around $30 million for the fleet. This is nothing that would jeopardize our motivation and our ability to pay a dividend if the market continues to develop in that base. And we are definitely there to follow our sustainability goals. We have a clear set of sustainability goals that we -- that means we will continue to invest into making our vessels more attractive and more environmental, friendly to the extent we can invest in our secondhand vessels. [indiscernible] has raised the question. Sorry, but I came in late, is the estimate for the EBITDA, including the Songa ships? Yes, it is with the additional incumbent of first inclusion upon closing, i.e., early August. So it will be as of -- earnings as of August, but that is included in the EBITDA guidance. [indiscernible] raised the question, a general question from the community. Are you investigating looking into the risk with regards to what kind of goods you are transporting, especially around foresight related to increased, decreased exports from Asia? Are you looking into this and planning scaling accordingly. I'm not sure I fully understand the question. We obviously operate with the key players in the market who themselves have a very thorough monitoring system. So I'm not really sure, please be more concrete on that question then I'm happy to explore that a bit more in detail. Then there's a question by [indiscernible]. Do you believe world politicians could affect the market by regulation, et cetera? These rates are going to disrupt the world trade? Well, there have obviously been all kinds of discussions about collusion by the liner companies, which I think is complete nonsense. I do believe this really is a combination and, let's say, a combination of different effects, high volumes, disruption through port closures, Ever Given and congestion on the U.S. West Coast. So I think this is really what it's all about. And I don't think that politicians would be well off to interfere with this because the supply chains are already on the edge. And we need to make sure that people receive the goods in time, on time. And this is already stretching it quite a bit for the liner operators. So I don't see that as a significant risk at this point. So operator, there are no further questions on the web. I have addressed all of them. I hope if there are further questions, please feel free to drop another line and/or come through the voice over through the operator. And on that note, back to you, operator, please.

[Operator]

Yes. There is no more further questions in the telephone lines. [Operator Instructions]

[Constantin Baack, Chief Executive Officer]

Let's wait for 1 more minute to...

[Operator]

[Operator Instructions] So there are no further questions at this moment. I will hand over to you, Mr. Constantin.

[Constantin Baack, Chief Executive Officer]

Yes. There's 1 more question, actually. There's a question by [indiscernible]. Will you consider share buybacks in addition to dividends? Share buybacks are clearly 1 instrument in our toolkit. And it is definitely something to consider. Having said that, and as I said earlier, first of all, we want to focus on our priorities. But share buybacks will definitely be an instrument that we consider. We have actually done that in the past, and we will continue to consider this going forward as an additional way to return capital to investors and create value. Then lastly, there's another question coming in from [indiscernible]. Have you considered -- same thing. Have you considered share buyback? So I think I answered that. So [indiscernible] and [indiscernible], either you're in 1 room and addressed the same question. Yes. Okay. Then there are no further questions. And I'm happy to hand back to you, operator.

[Operator]

Yes, there are no more further questions on the phone lines. [Operator Instructions] Still no any questions coming through, so please continue.

[Constantin Baack, Chief Executive Officer]

All right. If there are no further questions, operator, I thank you for hosting this and everyone else for their interest and participation. Looking forward to the rest of the year. It's an interesting market environment. And I hope we will all enjoy the rest of 2021 and beyond in the container sector. Many thanks, and take care. Bye-bye.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.