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Thursday, October 29, 2020

Navigating Rough Seas at Box Ships Inc (OTCMKTS:TEUFF)

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Box Ships Inc (OTCMKTS:TEUFF) is a penny stock that has grabbed hold of the attention of traders during the stock’s recent bounce. We’ve seen better than 110% tacked on to share pricing for the listing in the past month, but this action is running counter to the larger trend in the name as the company struggles against major headwinds in the shipping space due to depressed trade and growth conditions across most major and emerging economies.

That said, market participants may want to pay attention to this micro-cap stock. TEUFF has a track record that includes a number of dramatic bounces. Lately, the stock has seen interest climb along with share pricing, with an increase in recent trading volume of 25% over the long run average. This is particularly important with a float in play that’s relatively small — just a tad more than 29M shares. As savvy traders are well aware, with such a tight trading float, this kind of ramping interest can force a supply-shock squeeze if momentum or conditions improve from here.

Box Ships Inc (OTCMKTS:TEUFF) trumpets itself as a shipping company that engages in the seaborne transportation of containers worldwide. As of December 31, 2015, it had a fleet of nine containerships with a total capacity of approximately 43,925 twenty-foot equivalent units. TEUFF is an Athens, Greece-based international shipping company specializing in the transportation of containers.

The Company’s common shares and Series C Preferred Shares trade on OTC Markets under the symbols “TEUFF” and “TEUCF,” respectively.

The company was founded in 2010 and is based in Voula, Greece.

The company’s Founder, Chairman and Chief Executive Officer, Michael Bodouroglou, wrote an impassioned letter to shareholders over the summer that aptly sums up the picture. And these words probably apply to any shipping company in a world with depressed growth and trade on a global and chronic basis:

“Steering Box Ships through a long, cyclical downturn is just the same: a lot of hard work. We need to continue to work hard, stick to our plans, and ultimately get through these hard times. Like you, I have watched as maritime shipping has been mired in a long downturn.

“The entire container shipping sector has suffered and, along with the dry bulk and LNG sectors, we are at cyclical lows. I have seen these times before. I have been in marine shipping, as a shipping company founder, executive and technical superintendent supervising vessels for other shipping companies, for more than 35 years. These highs and lows are a part of life and we understand the classically cyclical nature of the business. Times like these are not only financially difficult, they are humbling as well. At Box Ships, we are doing the prudent thing.

“We are managing through the downturn, preserving cash liquidity by reducing operating and administrative costs significantly and working closely with our lenders. In recent weeks we renegotiated our loans and deferred loan instalment payments until Q1 2017, positioning ourselves to be able to move forward when times change — which they will. It’s difficult to predict exactly when conditions will improve. The analysts who follow shipping are quite often wrong. Experience tells us that change often comes when you least expect it. And when it comes, things can change quickly.”

Currently trading at a market capitalization of $729K, TEUFF has a significant war chest ($5.91M) of cash on the books, with total assets just shy of $170K, which is dwarfed by a massive debt load ($123.29M). The company has raked in trailing top line sales of over $44M, so it’s not crazy to see this as a viable operation capable of climbing back into good fiscal health over time, particularly with levered free cash flow over $15M, though a deterioration in operating conditions will almost certainly cast a dilutive pall over shares. As the Board of the Company noted recently, at the first sign of an uptick in growth, shareholders will be subject to a reverse split, which could elevate potential for some concerning shenanigans with the cap table. As with all shipping companies, Box Ships will be largely dependent on a combination of macro forces, including global trade liquidity and overall economic growth. But with a small float and rising interest, is this going to provide for a skyrocket squeeze with $4 trln in central bank liquidity floating on a different sea? To get the full story on TEUFF subscribe below to oracledispatch right now.

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