Diana Shipping Inc (NYSE:DSX)

Dry bulk shipper with a current fleet of 50 vessels (4 Newcastlemax, 14 Capesize, 5 Post-Panamax, 5 Kamsarmax and 22 Panamax) with a weighted average age of 8.5 years. As with all shipping companies, was deeply affected by the 2008 boom and subsequent bust of shipping rates. Average rates hit a second and equally low bottom in early 2016. Since then lease rates have been moving higher and are now fluctuating within the historic "normal" range of 1000-2000 on the Baltic Dry Index (BDI).

Diana Shipping's vessels are normally chartered for time periods of 1-2 years, so rising current rates (or spot rates) take time to develop into higher revenue. Eleven out of their fifty vessels have recently been rechartered at higher rates; as much as 72% more.

On the ship supply side, the world's dry bulk fleet (>20,000 dwt) has grown from less to 7,000 vessels ten years ago to over 10,000 today. Worldwide in 2017, 430 vessels were built and delivered, while 204 were scrapped (2.3% fleet growth). The outlook for 2018 looks to be similar, with about 440 vessels expected to be completed.

On the demand side, 2018 world economic growth is expected to exceed 3%, with more than 6% growth in the eastern and southern Asian countries.

In mid-2017, Diana Shipping extended another $40 million to its 2010 spin-off, Diana Containerships. Diana Containerships used the money to settle a loan it had from the Royal Bank of Scotland. Diana Shipping now has $87 million lent out to Diana Containerships, and it is still questionable if Diana Containships can survive. Diana Shipping is also no stranger to very large non-cash impairment charges.

With the return to normal shipping rates (though still always cyclical), Diana Shipping can return to profitability by the end of 2018, and in that case, their stock will probably be valued in the $4.50 to $5.00 range.