UPDATE 2-Diana Shipping Q3 net halves, beats estimates

* Q3 EPS of 36 cents beat estimate of 34 cents

* Q3 net income halved to $28.7 mln

* Plans to buy vessels over the next two years (Recasts, adds analyst, conference call comments, shares)

By Swati Pandey

BANGALORE, Nov 10 (Reuters) - Greek dry bulk carrier Diana Shipping Inc's (DSX.N) quarterly net income fell by half but beat analysts' forecast, helped by higher-than-expected charter hire rates. Net income for the third quarter fell to $28.7 million, or 36 cents a share, compared with $57.6 million, or 77 cents a share, a year ago. Voyage and time charter revenue fell by a third to $58.2 million.

Analysts were expecting earnings of 34 cents a share on revenue of $55.5 million, according to Thomson Reuters I/B/E/S.

"They came in only 2 cents higher so from my perspective that's a very slight beat and that was due to higher-than-expected day rates," Scott Burk, analyst at Oppenheimer, said by phone.

Diana Shipping charters a majority of its vessels in the long-term charter market, thereby eliminating revenue volatility, as opposed to short-term spot market, where rates fluctuate on a daily basis.

However, the firm would now be open to put vessels on the spot market as locking-in vessels for long-term at current low levels was not desirable, Burk said.

The Baltic Exchange's main sea freight index .BADI, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertilizer, has risen by almost a third since mid-October to 3,197 points. It hit a life high of 11,793 points in May 2008.

"Major factor that we suspect behind the strength in the large bulk carrier freight market is that a lot of ships have not been delivered to their owners," Diana's president Anastassis Margaronis said on the call.

"The bulk carrier fleet by the end of 2009 may have grown under 4 percent. So we have to wait and see what happens to these ships and when they are going to be delivered," he added.

SHOPPING SPREE

The Greek dry bulk carrier is expecting delivery of an additional capesize vessel in February 2010, Chief Executive Officer Simeon Palios said on the call.

Besides, the firm intends to buy attractively priced vessels over the next two years, he added. "The new building prices are coming down very nicely. Today you can build for delivery in 2010 in capesizes for roughly $55 million, which was definitely not the case three months ago," Palios said.

The company's "rock-solid" balance sheet is giving it the flexibility to expand over 24-30 months, Palios said.

As on June 2009, Diana had long-term debt of $214 million in its balance sheet, compared with total market capitalization of $1.15 billion.

"Diana can afford to grow at a moment's notice and does not face any debt covenant issues, unlike much of its competition," Lazard Capital Markets, which has a 'buy' rating on the stock, said in its report after the results.

Credit Suisse, which has an 'outperform' rating on the stock, has raised its 2009 EPS estimate to $1.59 from $1.54 driven by the updated fleet employment profile and timing of new building deliveries, it said in a report on Tuesday

Shares of the company were down 6 cents at $14.10 in morning trade on the New York Stock Exchange. They had earlier touched a high of $14.43 and a low of $13.68. (Editing by Jarshad Kakkrakandy)