OceanFreight Inc. (NASDAQ: OCNF)

OceanFreight Inc. (OCNF) is a global provider of shipping transportation services. The Company specializes in transporting drybulk cargoes, including such commodities as iron ore, coal, grain and other materials and crude oil cargoes through the ownership and operation of nine drybulk carriers and four tanker vessels.

OceanFreight Inc. was founded in 2006 and is based in Athens, Greece.

Share Statistics Oct-28-09			2007	2008	%Chg	Q2 2008	Q2 2009	% Chg
Symbol	OCNF	Revenue, Mn	41.1M	157.4M	73.9%	37.3M	29.1M	98.89%
Current price	$0.98	Gross margin	69.1%	72.4%	3.3	65.7%	48.6%	17.1
52wk Range:	$0.80-$7.95	Oper. margin	28.2%	38.5%	10.3	44.4%	-102.2%	146.6
Avg Vol (3m):	4,871,270	Net margin	20.0%	17.6%	2.4	60.2%	-101.5%	161.7
Market Cap.	93.1M
Dil. Shares Outst.	90.4M	EPS, $	0.78	1.94	59.8%	1.65	-0.02	101.2%

Source: http://www.reuters.com/finance/stocks/incomeStatement?symbol=OCNF.O , https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=ocnf , http://www.oceanfreightinc.com/

Financial Summary

OCNF generate revenues by charging customers for the transportation of drybulk and crude oil cargoes using the Company’s vessels. With the exception of the tanker M/T Olinda, which is employed in the Blue Fin Tankers Inc. spot market pool, the Company employs its drybulk carriers and tankers to reputable charterers primarily pursuant to long-term time charters. As of December 31, 2008, the Company’s charters have remaining terms ranging between five months and 41 months. OCNF may employ vessels under spot-market charters in the future. A time charter is contract for the use of vessel for specific period of time during which the charterer pays substantially all of the voyage expenses, including port and canal charges and the cost of bunkers (fuel oil), but the vessel owner pays the vessel operating expenses, including the cost of crewing, insuring, repairing and maintaining the vessel, the costs of spares and consumable stores and tonnage taxes.

Under spot-market charter, the vessel owner pays both the voyage expenses (less specified amounts covered by the voyage charterer) and the vessel operating expenses. Under both types of charters OCNF pays commissions to ship brokers and to in-house brokers associated with the charterer depending on the number of brokers involved with arranging the charter. Vessels operating in the spot-charter market generate revenues that are less predictable than time charter revenues but may enable the Company to capture increased profit margins during periods of improvements in drybulk and crude oil rates. However, OCNF is exposed to the risk of declining drybulk and crude oil rates when operating in the spot market, which may have materially adverse impact on its financial performance.

Voyage revenue increased by $111 million or 308.3% to $147.1 million for 2008 compared to $36.1 million for 2007. The increase is attributable to the increase in the size of the fleet from 10 vessels in 2007 to 13 vessels in 2008 and the increase in voyage days from 1282 in 2007 to 4142 in 2008. The increase in voyage days is attributable to the fact that the vessels in 2007 were acquired at various dates subsequent to June 2007 while the same vessels were operated for the full year in 2008. The TCE rate for 2008 was $34705 per day as compared to $30558 in 2007 which in conjunction with improved fleet utilization of 99.1% in 2008 as compared

to 94% in 2007 positively contributed to the increase in revenue.

Voyage expenses increased by $12.3 million or 615% to $14.3 million in 2008 as compared to $2.0 million in 2007, including commissions which totaled $6.5 million, and $1.6 million in 2008 and 2007, respectively. The amount for 2008 includes voyage expenses of $8.3 million relating to the employment of the M/T Olinda in the spot market from her acquisition in January 2008 until late October 2008.

By employing its vessels on spot-market voyage charters, OCNF incurs voyage expenses that include port and canal charges and bunker expenses, unlike under time charter employment where such expenses are assumed by the charterers.

Net income increased by $19.6 million from $8.1 million in 2007 to $27.7 million in 2008. The increase is attributable to the increase in the size of the fleet and the increased TCE rates that resulted in increased operating income which was partly offset by the increase in the Company’s interest and finance costs and the marked to market valuation of its interest rate swap agreements. While net income increased 248% in 2008 versus 2007, earnings per share increased only 149% given the additional shares issued in 2008 in connection with the controlled equity offering.

OCNF’s principal sources of funds are equity provided by its shareholders, operating cash flows, and long-term borrowings. Its principal use of funds has been capital expenditures to establish and grow its fleet, maintain the quality of its fleet, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, make principal repayments on outstanding loan facilities, and historically to pay dividends.

The Company’s practice has been to acquire drybulk and tanker carriers using combination of funds received from equity investors and bank debt secured by mortgages on its vessels. The Company’s business is capital intensive and its future success will depend on the ability to maintain high-quality fleet through the acquisition of newer vessels and the selective sale of older vessels. These acquisitions will be principally subject to management’s expectation of future market conditions as well as the ability to acquire drybulk carriers or tankers on favorable terms.

Source: http://www.oceanfreightinc.com/sec.html

Analyst Consensus

Buy

Outperform

Hold

Underperform

Sell

No Opinion

This is the consensus forecast amongst 2 polled investment analysts. Against the OceanFreight Inc company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	0	0	1	0	1	0
4 weeks ago	0	0	1	0	1	0
2 months ago	0	0	1	0	1	0
3 months ago	0	0	2	0	0	0
Last year	1	0	1	0	0	1

The one analyst offering a 12-month price target expects the share price of OCNF to remain relatively unchanged over the next year.

Source: Financial Times.com

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Dec-09	1	33.62	33.62	33.62	35.90
Quarter Ending Mar-10	1	36.04	36.04	36.04	–
Year Ending Dec-09	2	132.13	133.66	130.60	143.13
Year Ending Dec-10	2	130.80	140.40	121.20	–
Earnings (per share)
Quarter Ending Dec-09	1	-0.01	-0.01	-0.01	0.56
Quarter Ending Mar-10	1	0.03	0.03	0.03	–
Year Ending Dec-09	1	-0.37	-0.37	-0.37	1.77
Year Ending Dec-10	2	-0.09	-0.03	-0.14	–

Source: http://www.reuters.com/finance/stocks/estimates?symbol=OCNF.O

Investment Highlights

OCNF last month announced a new charter for the recently acquired 180,000DWT, 2005 built capesize vessel. Upon delivery, the vessel will be renamed M/V Montecristo and will commence employment on a time charter for a minimum period of four years at a gross rate of $23,500 per day and a maximum of eight years at an average gross rate of $24,125 per day for the optional period.

OCNF earlier this month announced the following chartering and sale and purchase developments:

• The Company has agreed to acquire a 2006 built 174,333 dwt Capesize bulk carrier, M/V Juneau, to a third party for a gross price of $19.9 million. Delivery of the vessel is expected to take place on expiration of the current charter and no later than November 20, 2009.

• The previously announced sale of the 1996 Panamax M/V Lansing is now concluded, as the vessel was delivered to the new owners on July 1, 2009.

• The previously announced purchase of a 2001 built Panamax, 74,716 dwt from a third party, has been terminated due to Sellers’ financiers not lifting their conditions to the sale.

• The Company has entered into a time charter for the Panamax dry bulk carrier, M/V Richmond, that will commence on or before July 31, 2009, at a gross rate of $18,100 per day for a period of 11.5 months and a maximum of 14.5 months. This vessel became available following an early redelivery by the vessel’s present charterers. As agreed compensation for the early redelivery, the Company will receive a lump sum payment of $200,000.

• The Company has entered into a time charter contract for the Panamax dry bulk carrier, M/V Topeka, that will commence on or before July 31, 2009, at a gross rate of $18,000 per day for a minimum period of 17 months and a maximum of 20 months. This fixture follows the default of the present charter which is expected to commence insolvency proceedings. The Company plans to take full legal remedy against the charterer.

Source: Scottrade.com, Reuters.com

Technical Analysis

Source: www.quotemedia.com

Moving Average Price Compare

OCNF is below its 50-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

Bollinger Bands

OCNF is trading below its lower Bollinger Band. Relative to recent price action, the stock is currently overextended to the downside and due for either a pause or retracement.

MACD

The MACD for OCNF currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Oct-28-2009	symbol	Share, $	$ Mn	2009	2010	2009	2010
United Parcel Service Inc.	UPS	54.58	54.22B	26.48	N/M	N/A	N/M
FedEx Corp.	FDX	74.96	24.02B	N/A	N/M	N/A	N/M
Japan Post Holdings Co. Ltd.	TNTTY.PK	27.53	N/A	N/A	N/M	N/A	N/M
Eagle Bulk Shipping Inc.	EGLE	5.18	335.9M	22.59	N/M	N/A	N/M
Median		40.56	26.13B	24.54
OceanFreight Inc.	OCNF	0.98	93.1M	N/A	N/M	N/A	N/M

Source: Reuter.com,

Nasdaq.com

Insider Trading Activity

Net Share Purchase Activity

Insider Purchases - Last 9 Months Shares Trans Purchases N/A N/A Sales N/A N/A Net Shares Purchased (Sold) N/A N/A Total Insider Shares Held N/A N/A % Net Shares Purchased (Sold) N/A N/A

Net Institutional Purchases - Prior Qtr to Latest Qtr Shares Net Shares Purchased (Sold) N/A % Change in Institutional Shares Held N/A

Data provided by Thomson Financial

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