Euroseas Ltd. Conference Call Summary Company Overview - Euroseas Ltd. operates in the container shipping industry, focusing on the feeder segment with a fleet of 22 vessels, including 15 feeder container ships and 7 intermediate-sized container ships, totaling over 67,000 TEU capacity [2][3] - The company has four vessels under construction, each with a capacity of 4,300 TEU, scheduled for delivery in late 2027 and early 2028 [3] Industry Context - The container shipping market has experienced significant fluctuations over the past 20 years, influenced by events such as China's WTO entry, the financial crisis, and the COVID-19 pandemic, which led to unprecedented shipping rates [9][10] - Recent geopolitical events, such as the situation in the Red Sea, have further impacted shipping dynamics, creating additional demand for feeder services [10][11] Fleet and Operational Strategy - Euroseas is modernizing its fleet through a new building program and retrofitting older vessels to improve fuel efficiency, achieving fuel savings of approximately 25% [5][6] - The company emphasizes the importance of the feeder sector, which plays a critical role in distributing containers from major hubs to final destinations [7][15] Financial Performance - Euroseas reported $114 million in net revenue and an EBITDA of $76 million in the first half of the year, with average charter rates of $28,500 per day [18] - The company has 100% fleet employment for 2025 and 70% for 2026, with contracted rates exceeding $30,000 per day [17][18] - A dividend of $0.70 per quarter has been established, translating to a 5% annualized yield [19] Market Outlook and Challenges - The company faces uncertainties related to tariffs, the resolution of the Red Sea situation, and environmental regulations that may impact the shipping industry [11][12] - The supply of container ships is high, with a significant number of vessels under construction, which could affect future rates and demand [12][13] Investment Thesis - Euroseas believes that the feeder segment will experience different supply dynamics compared to the overall container ship market, with a low order book and a high percentage of older vessels likely to be removed from service [14][15] - The company maintains a strong balance sheet with low leverage, a market value of the fleet significantly above debt levels, and a net asset value estimated at $80 per share, compared to a recent trading price of around $56 [20][21] Conclusion - Euroseas presents a compelling investment opportunity in the container shipping market, particularly in the feeder segment, with strong earnings visibility, a solid dividend yield, and potential for stock price appreciation [30]

Group 1: Industry Overview - The oil shipping sector is currently undervalued, with companies showing resilience and dividend support, suggesting a focus on left-side opportunities and seasonal demand improvements [1] - Recent shipping price updates indicate a rebound in container shipping rates for the US routes, while European routes have declined. The SCFI index shows a week-on-week change of +17.0% for US routes and -11.2% for European routes [2] - The dry bulk shipping market has seen a strong recent increase in freight rates, with the BDI index up by 7.0% week-on-week, indicating potential demand improvements [2] Group 2: Company Focus - Companies such as COSCO Shipping Energy (中远海能), China Merchants Energy Shipping (招商轮船), and China Merchants Jinling (招商南油) are highlighted as key players to watch due to their potential for growth and dividend yields [1] - High-dividend private enterprises like Seaspan (海丰国际) and Zhonggu Logistics (中谷物流) are recommended for their short-term and long-term value propositions, particularly during the peak season in the second half of the year [1] - The small container ship supply in the Asian region is expected to remain tight, with only a 1-2% annual increase in supply over the next three years, while the proportion of older ships (over 25 years) is at 11.2% [3] Group 3: Market Dynamics - The average capacity of vessels in the Asian region is concentrated in larger global operators, with the top ten companies holding about 70% of the capacity share, indicating a high chartering ratio [3] - The deployment of vessels in Asia is primarily focused on larger ships (3,000 TEU and above), which creates a competitive landscape with companies like Seaspan focusing on smaller vessels for regional routes [3]

Core Viewpoint - The container shipping demand from China to the U.S. is currently weak, with freight rates plummeting to their lowest levels in over a year and a half, primarily due to reduced shipping volumes and the impact of high U.S. tariffs [1][3][4]. Group 1: Freight Rate Trends - Container shipping freight rates from Shanghai to the U.S. West Coast have dropped to $1,759 per 40-foot container as of August 15, down from a peak of $5,606 in early June [3]. - The freight rates have fallen below pre-agreement levels, reaching lows not seen since December 2021, indicating a significant decline in demand [3][6]. - The shipping rates from Shanghai to the U.S. East Coast have also decreased to their lowest levels since the end of 2023 [3]. Group 2: Shipping Volume and Demand - The shipping volume from China to the U.S. has decreased by 25% year-on-year in the first week of August, reflecting a broader trend of reduced demand [3][4]. - The U.S. National Retail Federation (NRF) forecasts a 20% year-on-year decline in container imports for September, with expectations of continued decreases through the end of the year, projecting a 5.6% reduction for the entire year compared to 2024 [6]. - Despite a temporary increase in shipping volume in July, the overall demand remains below last year's levels, with a reported 8% decrease in year-on-year shipping volume from China to the U.S. [9]. Group 3: Regional Shipping Dynamics - Southeast Asia has seen a 34% increase in shipping volume to the U.S., with significant growth from countries like Vietnam (34%), India (31%), and Malaysia (70%), indicating a shift in sourcing from China to other regions [10]. - The overall shipping volume from Asia to the U.S. increased by 1% in July, driven by a recovery in Chinese exports and active Southeast Asian exports [9]. - The return of vessels previously allocated to U.S. routes has led to a normalization of supply, causing freight rates on European and South American routes to decline as well [8].

Core Viewpoint - 德翔海运 is experiencing a significant stock price increase, attributed to strong mid-year earnings expectations and favorable market conditions [1] Company Summary - 德翔海运's stock rose over 12% during trading, currently up 7.03% at HKD 9.9, with a trading volume of HKD 195 million [1] - The company anticipates a mid-year profit of between USD 180 million to USD 200 million, representing a substantial year-on-year growth of 220% to 255% [1] - The increase in profit is primarily driven by a rise in average freight rates and an increase in the number of vessels rented at higher rates, leading to increased charter income [1] Industry Summary - The formation of the 双子星联盟 is transforming shipping routes from pendulum-style to radial-style, increasing demand for smaller vessels [1] - The theoretical addition of 40 small container ships (2,000 TEU) to a weekly European route highlights the shift towards smaller vessels for efficiency [1] - The exemption of non-Chinese shipowners from the US 301 investigation for vessels under 4,000 TEU underscores the potential benefits of smaller ships amid market disruptions [1]

Investment Rating - The investment rating for the company is "Buy" [3][10]. Core Insights - The company reported a strong performance in the first half of 2025, with revenue of $1.6645 billion, a year-on-year increase of 28%, and a net profit attributable to shareholders of $630 million, up 79.7% [8]. - The increase in both volume and price contributed to the positive results, with a cargo volume of 1.83 million TEU, a 7.3% increase year-on-year, and an average revenue per container of $776 per TEU, a 22.77% increase [8]. - The company has a high dividend yield of 11.5%, with a dividend of HKD 1.30 per share and a payout ratio of approximately 73% [8]. - The demand for shipping services in Southeast Asia remains strong, with a 13% increase in exports from China to ASEAN countries in the first half of the year [8]. - The supply side is constrained by limited new orders for smaller container ships, with only 5.4% of the fleet having orders, and an aging fleet pushing for capacity exit [8]. Financial Data and Profit Forecast - Revenue projections for the company are as follows: - 2023: $2.429 billion - 2024: $3.058 billion - 2025E: $3.182 billion - 2026E: $2.962 billion - 2027E: $2.942 billion [7][12] - Net profit attributable to shareholders is forecasted as: - 2023: $531 million - 2024: $1.028 billion - 2025E: $1.130 billion - 2026E: $859 million - 2027E: $790 million [7][12] - The company’s price-to-earnings (PE) ratio is projected to be 8.2 for 2025, which is below its historical range of 10-20 [8].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance slightly exceeded expectations, with a projected net profit of approximately $180-200 million for the first half of 2025, representing a year-on-year increase of 220%-225% compared to $56 million in the same period of 2024 [9] - The increase in performance is attributed to the rise in freight rates due to market conditions and the contribution of new capacity delivered in 2024 [9] - The report highlights strong freight performance in Southeast Asia, with significant year-on-year growth in freight rates and volumes [9] Financial Data and Profit Forecast - Revenue projections (in million USD): - 2023: 875 - 2024: 1,340 - 2025E: 1,351 - 2026E: 1,299 - 2027E: 1,539 - Year-on-year growth rates: - 2023: -64% - 2024: 53% - 2025E: 0.8% - 2026E: -4% - 2027E: 19% [8] - Net profit projections (in million USD): - 2023: 21 - 2024: 366 - 2025E: 378 - 2026E: 334 - 2027E: 449 - Year-on-year growth rates for net profit: - 2023: -98% - 2024: 1,667% - 2025E: 3% - 2026E: -12% - 2027E: 34% [8] - The company maintains a low PE ratio of 4.8, significantly below comparable companies, supporting the "Buy" rating [9][10]

Summary of Conference Call Notes Industry Overview - The focus of the conference call is on the Asian shipping industry, particularly the container shipping market, which is experiencing increased attention from the market participants [1] - The Asian shipping market is characterized as having a balanced supply and demand, with trends of industrial chain transfer and trade fragmentation potentially increasing trade demand [1] Key Insights on Demand - The Asian shipping lane is the second-largest segment in the international container shipping industry, accounting for approximately 31% of global trade volume in 2024 [2] - The growth rate of container shipping volume from 2001 to 2024 is projected at 6.85%, significantly higher than other routes [2] - Key factors driving the rapid growth of the Asian container market include: - High population base and consumption potential in the region - Ongoing industrialization in emerging economies, particularly ASEAN countries - RCEP's zero-tariff policies and other facilitative conditions enhancing regional trade [2] Supply Side Analysis - The new capacity in the Asian market is primarily composed of container ships under 3000 TEU, with an order backlog of only 3.6%, significantly lower than the industry average of 28.55% [3] - The proportion of ships over 20 years old is 24%, exceeding the industry average of 11% [3] - Clarkson's forecast indicates a capacity growth rate of 0.59% and -2.97% for ships under 3000 TEU over the next two years [3] Impact of Tariffs and Trade Dynamics - The imposition of tariffs has led to significant adjustments in the import-export structure between China and the U.S., with a decline in China's share and an increase in ASEAN's share [4] - Recent developments in U.S.-China trade negotiations have resulted in a substantial reduction of tariffs for a 90-day period, potentially leading to a surge in shipments from Asia to the U.S. [4] - The 301 tariff law may encourage shipowners to use smaller vessels, promoting trade fragmentation and sustaining high regional market demand [5] Company Comparisons - **HMM (Hyundai Merchant Marine)** has the largest total capacity among competitors, ranking 15th globally, with a capacity 60% higher than that of Yang Ming and over double that of ZIM [6] - **Yang Ming** has the highest cumulative growth rate in self-owned capacity at 223%, while HMM's total capacity growth has been achieved mainly through leasing [6] - As of the end of 2024, HMM has the highest proportion of available capacity at 91%, followed by Yang Ming at 79% and ZIM at 52% [7] Financial Performance and Metrics - HMM's revenue structure shows a high proportion of income from Southeast Asia, while ZIM has a higher share from Northeast Asia [9] - HMM's gross and net profit margins are more stable compared to Yang Ming, with margins reaching 47-48% [11] - HMM has maintained a dividend payout ratio above 70% over the past five years, with a maximum of 94% [12] Investment Recommendations - The Asian shipping market is viewed as a high-quality segment within the container shipping industry, with balanced supply and demand dynamics [13] - Companies such as ZIM, HMM, and Yang Ming are expected to benefit from the sustained high market conditions [13] - Potential risks include macroeconomic fluctuations, changes in tariffs, and increased competition [13]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - The freight rate is fluctuating at a high level. The 8 - month contract is in a state of high - level volatility and game for delivery, with expectations of price support. The 10 - month contract is mainly for short - allocation in the off - season, and attention should be paid to the downward slope of the freight rate. The 12 - month contract still follows the off - peak and peak season pattern, but the risk lies in whether the Suez Canal will reopen [3][4]. - The strategy includes a volatile main contract for unilateral trading, and for arbitrage, it is recommended to go long on the 12 - month contract and short on the 10 - month contract, and short the 10 - month contract on rallies [7]. 3. Summary by Related Catalogs I. Futures Price - As of July 15, 2025, the total open interest of all contracts of the container shipping index for European routes was 77,426.00 lots, and the single - day trading volume was 58,106.00 lots. The closing prices of EC2602, EC2604, EC2506, EC2508, EC2510, and EC2512 contracts were 1386.10, 1218.60, 1382.20, 2027.20, 1440.70, and 1580.50 respectively [5][6]. II. Spot Price - On July 11, 2025, the SCFI (Shanghai - Europe route) price was 2099.00 US dollars/TEU, the SCFI (Shanghai - US West route) price was 2194.00 US dollars/FEU, and the SCFI (Shanghai - US East) price was 4172.00 US dollars/FEU. On July 14, the SCFIS (Shanghai - Europe) was 2421.94 points, and the SCFIS (Shanghai - US West) was 1266.59 points [6]. III. Container Ship Capacity Supply - In 2025, it is still a big year for container ship deliveries. As of July 11, 2025, 141 container ships had been delivered, with a total capacity of 1.194 million TEU. Among them, 46 ships with a capacity of 12,000 - 16,999 TEU were delivered, with a total capacity of 689,300 TEU, and 7 ships with a capacity of over 17,000 TEU were delivered, with a total capacity of 159,880 TEU [6]. IV. Supply Chain - Geopolitically, representatives of the Syrian regime and the Syrian Kurdish armed forces met and negotiated in Damascus. The Syrian regime advocates "one Syria, one army, one government" and opposes separatism [2]. - The average weekly capacity from China to European base ports in the remaining 3 weeks of July was 303,500 TEU, and the monthly average weekly capacity in August was 310,000 TEU. There were 5 blank sailings in July (4 by the OA alliance) and 2 in August (both by the OA alliance). Maersk plans to add an extra - sailing ship in WEEK34 [2]. V. Demand and European Economy - In the off - season of April and October, the freight rate is usually at a low level. In the fourth quarter, due to Western holidays, the shipping volume is high, and shipping companies adjust supply to keep freight rates high. The price in December is generally 10% higher than that in October in normal years [4].

1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report - The container shipping market's EC盘面 maintains an overall volatile trend, with spot freight rates remaining relatively firm. The market is still speculating on the timing of the freight rate peak and the subsequent decline rate. Attention should be paid to tariff policies and geopolitical dynamics [4][5]. - The dry - bulk shipping market shows that large - vessel market is expected to be weakly volatile in the short term, while the medium - vessel market is expected to be strongly volatile. The tense situation in the Red Sea may increase shipping costs [15][19]. - In the tanker shipping market, short - term freight rate increases are mainly due to geopolitical conflict premiums. The impact of market sentiment changes on freight rates needs further attention [23]. 3. Summary by Directory Container Shipping Market Analysis and Strategy Recommendation - **Market Performance**: On July 10, EC2508 closed at 2022.5 points, up 0.5% from the previous day. The latest SCFIS European line reported 2258.04 points on July 10, up 6.3% month - on - month, and the SCFI European line reported $2101/TEU on July 4, up 3.5% month - on - month [2][4]. - **Logic Analysis**: Mainstream shipping companies' quotes are differentiated. The demand side is in the traditional peak season from July to August, but the impact of tariff policies on the shipping rhythm needs attention. The supply side shows that the weekly average capacity in July, August, and September 2025 is 284,900/289,500/298,700 TEU respectively, and the capacity in August and September has increased slightly compared to the previous schedule. Trump extended the tariff exemption period to August 1 and announced new tariffs on multiple countries [5]. - **Trading Strategy**: Unilateral trading should be volatile, focusing on tariffs and geopolitical dynamics. For arbitrage, conduct rolling operations on the 10 - 12 reverse spread [6]. Industry News - Trump plans to impose a 50% tariff on Brazil and will soon announce tariffs on semiconductors. He also issued trade letters to multiple countries on the 9th, announcing tariff rates on various countries' products [8]. - The EU aims to reach a trade agreement with the US before August 1. The EU is ready to take counter - measures, with the first phase to take effect on July 14 [9]. - HD Korea Shipbuilding & Marine Engineering received contracts for 4 container ships worth approximately $610 million, and Navios Maritime Partners will sign a series of new container shipbuilding orders with HJ Shipbuilding worth about $460 million [9]. - Regarding the Red Sea situation, Israel and Hamas are in cease - fire negotiations, and Trump said there is a high possibility of resolving the Gaza issue this week [10][11]. Dry - bulk Shipping Market Analysis and Outlook - **Freight Index**: The Baltic Dry Index (BDI) fell to 1423 points, down 0.6%, the Capesize Index (BCI) fell 5.5% to 1654 points, the Panamax Index (BPI) rose 3.3% to 1621 points, and the Handysize Index (BSI) rose 2.3% to 1151 points [14][15]. - **Spot Freight Rates**: On July 9, the freight rate for the Brazil Tubarao - Qingdao (BCI - C3) route was $18.43/ton, down 0.11% month - on - month, and the West Australia - Qingdao (BCI - C5) route was $7.32/ton, down 2.66% month - on - month. As of July 4, the weekly freight rates for some routes showed different changes [15][16]. - **Shipping Data**: From June 30 to July 6, 2025, the global iron ore shipping volume decreased by 362,700 tons month - on - month. In June 2025, Brazil shipped 13.4203 million tons of soybeans in 20 working days, compared with 13.9596 million tons in July last year [17]. - **News**: The situation in the Red Sea is tense, with two bulk carriers attacked and sunk, which may increase the Red Sea detour ratio and shipping costs. Vietnam imposed a final anti - dumping duty of 23.01 - 27.83% on Chinese hot - rolled coils from July 6, 2025 [17][18]. Industry News - In June 2025, Vietnam's coal imports were 6.4568 million tons, up 1.44% year - on - year and down 10.38% month - on - month. From January to June, the cumulative coal imports were 38.0258 million tons, up 13.75% year - on - year [20]. - Trump issued tariff letters to 8 countries on July 9, with tariff rates ranging from 20% to 50% [20]. Tanker Shipping Market Analysis and Outlook - **Freight Rates**: On July 9, the Baltic Dirty Tanker Index (BDTI) was 932, down 0.32% month - on - month and 12.41% year - on - year. The Baltic Clean Tanker Index (BCTI) was 537, up 0.56% month - on - month and down 36.75% year - on - year. The BDTI has declined recently, and the upward driving force of freight rates mainly comes from geopolitical conflict premiums [22][23]. Industry News - As of the week of July 9, Singapore's middle distillate inventory decreased by 149,000 barrels, light distillate inventory decreased by 368,000 barrels, and fuel oil inventory increased by 1.328 million barrels [24]. - In early July, the shipping prices of gasoline and diesel were supported but not significantly boosted. The new shipping orders of gasoline and diesel decreased or remained flat. The prices of 92 gasoline, 95 gasoline, and diesel showed a downward trend [24]. - OPEC restricted five major news agencies from participating in the oil industry conference, raising concerns about the transparency of the global energy market [24][25].

Core Viewpoint - The implementation of mutual tariff adjustments between China and the U.S. has led to a significant surge in container bookings from China to the U.S., resulting in increased shipping rates and potential supply chain disruptions [1][2]. Group 1: Container Booking Surge - Container bookings from China to the U.S. have skyrocketed, with a 277% increase in the seven-day average bookings as of May 14, compared to the previous week [1][2]. - Shipping giant Hapag-Lloyd reported a 50% increase in container bookings from China to the U.S. in recent days [2]. Group 2: Impact on Shipping Rates - The shipping rates for the route from Shanghai to Los Angeles have surged, with Maersk's quote for a sailing on May 26 reaching $3,705 per FEU, a 96% increase from May 12 [1][5]. - The non-contract spot freight rate from Shanghai to Los Angeles rose by 16% to $3,136 per 40-foot container as of May 15 [3]. Group 3: Supply Chain and Capacity Issues - Experts predict that the surge in shipping volume will lead to a significant number of vessels arriving at U.S. West Coast ports, but they do not anticipate a crisis on the scale of the COVID-19 pandemic [3]. - Many factories are unable to fulfill new orders within 90 days, leading to cautious strategies among businesses due to uncertainties surrounding tariffs [4]. Group 4: Future Projections - The shipping industry anticipates that the "bottleneck" in U.S. shipping will persist until late July, with potential adjustments in capacity from European routes to meet U.S. demand [1][6]. - Shipping companies are beginning to shift capacity back to U.S. routes, but full recovery of capacity may take 1 to 2 weeks [6].