Danaos Corp (NYSE:DAC)

.5

earning about a third of its comparable companies, and trading at about 1 fourth of the price. now that they have most of the boats coming in, they will start to recover more and more earnings as debt lowers.

Shipping rates will recover.

Good growth and earnings.

Debt has been resolved with favorable terms. The principals are all in. Look for profits and a dividend to resume.

Short term volatility, long term headed to $5+. Good contracts.

dry bulk will float higher in 2012

Betting on a global economic recovery within 2010. Demand for resources and energy will first feel the effect than manufacturing and construction.

LIST OF DRY BULK COMMODITIES:

*coal

*grain (wheat, maize, rice, barley, oats, rye, sorghum, soybeans, etc.)

*iron (ferrous & non-ferrous ores, ferroalloys, pig iron, scrap metal, pelletized taconite), etc.)

*bauxite

*wood chips

*cement

*chemicals (fertilizer, plastic granules & pellets, resin powder, synthetic fiber, etc.)

*dry edibles (for animals or humans: alfalfa pellets, citrus pellets, livestock feed, flour, peanuts, raw or refined sugar, seeds, starches, etc.)

*bulk minerals (sand & gravel, copper, limestone, salt, etc.)

If I understand correctly, the PPS and low P/E is due to the 3.2 billion spent on new chartered ships of which $2 billion has yet to be paid for. Danaos has made the situation more difficult for investors by not being forthcoming about information on credit negotiations started in June (for the $634m additional liquidity they reported needing at the time). This would presumably get them through 2010.

The upside is the fact that these ships are chartered vessels that have long term contracts already in place; however, again, given the state of things in that area of the world it wouldn’t be surprising to see some defaults.

In years to come high interest rates and dilution will plague investors in this company as Danaos pays off this debt. The stock price has been adjusted to reflect this; however, has the market once again overreacted?

My bet is that it has and that this well-managed and highly profitable company is indeed undervalued.

same situation as SSW where international container shipping excess capacity makes for major credit risk with charterers

Looks like they are in a rough period, but in a year they will be out. Please let me know what you think.

adding to do some more research on; low PE and a strong dividend yield

Greek Dry Shipper with sound fundamentals beat down by present fears in its sector. Last year paid a high div yield in 20 - 30% range. Suspended dividend to conserve cash, lower its debt.

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Solid financials in difficult economic climate, especially in shipping. Upwards potential is great when economic growth kicks in.

Aggressive amount of debt but one of the pound for pound best in the industry. Will be a diamond again.

Shipping will come back as the economy gets moving. This company has a significant insider investment. Greeks have been in the shipping industry for thousands of years and will continue. The company continues to expand adding ships even during the down turn in the economy.

Anyone else getting these rough numbers? And please do correct if you spot any flawed methodology.

Everyone has been more than antsy the past few days about Zim Integrated Shipping Services' news that it's unilaterally cutting its long term charter-hire payments by 35% effective Sep 1, 2009. Per DAC's 2nd quarter '09 and Half-Year Earnings Report, released on July 27th, 2009, these ships have increased operating revenue for the 6 months ending 6/30/09 by $10.6 mil to a total of $154.4 mil.

The addition of these six ZIM ships also increased operating expenses by $3.5 mil to $45.9 mil for the same 6 months.

Now, not all of the ships were in operation for all 6 of those months due to their delivery dates (p. 2 on 2nd quarter earnings report). Of the past total 36 months of possible use (6 ships x 6 months), the delivery dates were such that these ships were only in operation for a total of 21 of those 36 months.

Taking this 21/36 ratio (.583), we can say that the $10.6 mil revenue increase contributed by these ships for the 6 months is only 58.3% of their full potential. Therefore, $18,182,000 is my rough estimate of what these ships would be bringing in for revenue, which translates into $3 mil revenue per ship per 6 months. (Same method can be applied to expenses, $6 mil full expense potential for 6 months for all 6 ships)

So if we factor in the 35% payment reduction attributed to ZIM, then we'd reduce our operating revenue to just shy of $2 mil per ship per 6 months operation. Expenses would stay the same, however, at $1 mil per ship per 6 months).

Though 35% is no small percentage, it appears that DAC will at least still be able to cover its operating expenses on these ships.

Also, DAC is taking delivery of 3 new ships in the 4th quarter '09 (2 Post-Panamax and 1 Panamax) and 4 new ships in the 1st quarter of '10. (4 Post-Panamax) that will result in an additional 42,400 TEU of carrying capacity, or more than 25% of the 165,933 TEU currently represented by the fleet (of which the ZIM vessels are included in that figure). Nevermind the 21 ships in addition to that which will be delivered between the 2nd quarter of '10 and 2012.

Yes, DAC has some issues to work out with the increases in its average debt and subsequent interest expense increases. These are no small matters, but given the continual effort by HSH Nordbank, Aegean Baltic and others to secure and extend DAC's waivers I think they are in a position where it is imperative they let DAC work out its debt troubles through continued, efficient and still profitable operation rather than put a financial vice on the entire business, thereby seizing all future cash flows.

Looks way too beaten down... though may be dead money for a while. The 2 billion in long-term debt hasn't scared off many of CAPS' best bulls, and even GMX gave it a vote of confidence at one point.

Outperform from here seems likely.