[Click eStock] "Pan Ocean, Target Price Down 13% Due to COVID-19 Spread"

[Asia Economy Reporter Park Jihwan] Daishin Securities on the 2nd lowered the target price of Pan Ocean from 6,300 KRW to 5,500 KRW, a 12.7% decrease, citing the expected downturn in the dry bulk shipping industry due to the impact of COVID-19. However, the investment rating was maintained as a buy.

Researcher Yang Jihwan of Daishin Securities stated, "Due to the suspension of operations in China, a major demand source for dry bulk shipping, caused by COVID-19, the market downturn continues, leading to a 12.7% downward revision of this year's earnings estimates."

He analyzed, "The expected benefits from the implementation of IMO2020 by the International Maritime Organization did not materialize as anticipated, and due to the suspension and disruption of operations in China caused by the spread of COVID-19, the dry bulk market remains at a very low level."

Researcher Yang diagnosed, "The timing for Chinese manufacturers to resume normal operations is uncertain, making it difficult to determine the point of full recovery for the dry bulk market."

Pan Ocean's fourth-quarter results last year fell short of market expectations due to unexpected expenses. Pan Ocean's Q4 sales decreased by 5.2% year-on-year to 618.7 billion KRW in revenue, operating profit fell by 2.1% to 51.2 billion KRW, and net profit plunged 27% to 27.9 billion KRW. The significant drop in net profit compared to operating profit was due to an impairment loss of 4.9 billion KRW related to the sale of aging vessels in January this year, which was preemptively reflected in the Q4 results.

Researcher Yang stated, "Excluding the approximately 3 billion KRW pre-purchase cost of very low sulfur fuel oil (VLSFO), performance bonuses of 5 to 6 billion KRW, and other one-time expenses, it appears that the operating profit met market expectations."

This content was produced with the assistance of AI translation services.