Seaspan Corp.: Stabilization Complete, Significant Price And Dividend Upside Ahead

Note: This report and related research were previously discussed at Value Investor’s Edge, where our first purchase was made at $5.13/sh.

Company Overview Seaspan Corp. (SSW) is the world’s largest containership leasing company, with a fully-delivered fleet of 96 vessels ranging between 2,500 TEU and 14,000 TEU. SSW charters their ships to multiple top-tier shipping lines, but the bulk of their long-term exposure is with Asian firms, most of which have heavy government support.
Key counterparties include China’s COSCO, Taiwan’s Yang Ming, and Japan’s MOL and K-Line. They also have a set of newbuilds with long-term contracts to giant liner firm MSC, which is the world’s 2nd largest carrier. SSW's closest publicly-traded comparable is Costamare (CMRE), but Seaspan is far larger, has more modern assets, and has a much more robust charter backlog.
Seaspan’s business model is very similar to Air Lease (AL) or AerCap (AER), which are both successful airplane leasing companies. However, unlike AL and AER, Seaspan doesn’t just finance and lease the ships to end-users, they also provide full crewing and operating solutions. SSW is also on the cutting edge of ship design collaboration and enjoys a strong relationship with many of the top shipyards.
Whereas firms like Air Lease and AerCap have significant financial scale, they are far more of a commodity play than SSW. Although Seaspan has some reasonably-sized... Read more

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