What is the length and key terms of the charter with PNSC, and how will it affect Performance Shipping’s cash flow, EBITDA and net income forecasts for the next 12‑18 months?
Charter terms: Performance Shipping disclosed that the M/T P. Aliki has been placed on a time‑charter with Pakistan National Shipping Corporation at a fixed rate of US $30,000 per day. The press release did not state the exact contract length, but Aframax LR2 time‑charters in the current market are typically signed for 12‑24 months with optional extensions. Assuming a 12‑month commitment (the most conservative scenario), the charter would generate roughly $10.95 million of daily‑rate revenue (30,000 × 365) for the vessel; a 24‑month term would double that figure.
Impact on forecasts: At a $30,000‑per‑day rate the vessel’s net cash‑flow contribution after fuel, crew and dry‑dock expenses is roughly $6–7 million per year (≈55‑60 % of the gross daily rate, based on the company’s historical cost structure). Adding this to Performance Shipping’s 2025‑2026 operating base lifts free cash flow by about $6 million (12‑month charter) to $12 million (24‑month charter). Because the charter is a fixed‑rate, off‑balance‑sheet revenue stream, it improves EBITDA by essentially the same amount (≈$6–12 million) and, after accounting for depreciation, interest and tax, adds roughly $3–5 million of net income over 12 months. Consequently, analysts are likely to upgrade the company’s 12‑18‑month cash‑flow, EBITDA and EPS guidance, narrowing the discount to peers and supporting a near‑term price target revision upward.
Trading implication: The new time charter removes a significant portion of earnings volatility that stems from spot‑rate fluctuations, providing a steady cash‑flow runway. In the context of a still‑tight global LR2 market and tightening freight spreads, the contract underlines the company’s ability to lock in premium rates and de‑risk its balance sheet, making the stock more attractive on a risk‑adjusted basis. Traders could consider accumulating PSHG on pull‑backs or buying call spreads positioned for a modest price appreciation as the market re‑prices the upgraded earnings outlook. Watch for the upcoming quarterly earnings release, where Management will likely quantify the charter’s contribution and possibly raise guidance; any surprise upward revision could trigger a short‑term breakout.