[Click eStock] "Pan Ocean Confirms Current Stock Price Bottom... Bulk Carrier Market Improvement Expected Next Year"

[Asia Economy Reporter Park Jihwan] Hi Investment & Securities on the 4th stated that the current stock price of Pan Ocean is at a bottom level, recommending a 'Buy' rating with a target price of 5,100 KRW. However, considering the seasonality of dry bulk freight rates, which account for about 80% of sales, a long-term approach is advised.

Researcher Ha Junyoung of Hi Investment & Securities analyzed, "Pan Ocean's Q3 earnings showed sales of 634.4 billion KRW and operating profit of 62.9 billion KRW, down 7.0% and 0.8% respectively compared to the previous year," explaining that "the decrease in sales compared to last year was due to a significant drop in bulk carrier freight rates following the decline in oil prices." Operating profit decreased compared to Q2 because the previously surged container ship and tanker freight rates normalized in Q3. The container ship and tanker ship divisions also saw freight rates normalize, and are expected to deliver similar results in Q4 as in Q3.

From next year, the supply and demand in the bulk carrier market is expected to improve. According to Clarkson, next year's bulk carrier demand is projected at 5.27806 billion dwt, a 4.1% increase from the previous year, while supply (capacity) is expected to increase by only 1.4% to 920.52 million dwt.

The rapid recovery of the Chinese economy from the COVID-19 crisis is also positive. Researcher Ha Junyoung said, "China's economy grew by 4.9% in Q3 as it emerged from the economic contraction caused by COVID-19," adding, "China's GDP is expected to grow by 8.0% next year, with fixed asset investment increasing by 6.9% compared to last year."

He added, "Although the stock price is judged to be at a bottom level now, considering the seasonality of dry bulk freight rates, which account for about 80% of sales, we recommend a strategy of approaching from a long-term perspective."

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