[Click eStock] "Pan Ocean, Q1 Dry Bulk Ship Market Supply and Demand Improvement Expected"

Hana Financial Investment Report

Pan Ocean

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained its buy rating and target price of 6,000 KRW for Pan Ocean on the 16th. This is based on the expectation of benefits from the improvement in supply and demand in the dry bulk shipping market and the deployment of vessels for long-term cargo transport contracts (CVC).

In the fourth quarter of last year, Pan Ocean's sales and operating profit are expected to increase by 0.3% and 17.7% respectively compared to the same period last year, reaching 620.5 billion KRW and 60.2 billion KRW. Toward the end of the year, the dry bulk shipping volume decreased due to China's winter steel production cuts and coal import restrictions, resulting in the Baltic Dry Index (BDI) for the fourth quarter remaining at 1,362 points. Additionally, the decline in the KRW-USD exchange rate negatively impacted Pan Ocean's performance, which uses the dollar as its functional currency. The drop in tanker shipping rates, which caused tanker operating profits to turn negative, was also a negative factor.

Park Muhyun, a researcher at Hana Financial Investment, explained, "The overall operating profit met market expectations due to the increase in cargo volume from the newly deployed long-term cargo transport contracts starting in the third quarter and improved profitability in the container segment. Due to conservative operating policies entering the off-season, the number of chartered vessels remained similar to the end of the third quarter at 121 vessels."

Currently, the BDI recorded 1,837 points at one time last month but is now at 1,306 points. In the short term, factors such as the resumption of port operations in China after the cold wave, the expansion of available shipping capacity due to the government's relaxation of coal import restrictions, and supply disruptions of iron ore and coal caused by sudden climate changes in Australia and Brazil have influenced this. The BDI is expected to rise again after the off-season in January and February. The average BDI for the first quarter is expected to be 1,550 points, a 162% increase compared to the same period last year, and Pan Ocean's operating profit is expected to grow by 60% to 60.3 billion KRW during the same period.

Researcher Park added, "The resumption of cash dividends for the first time in nine years (50 KRW per share, dividend yield of 1.01%) is also expected to have a positive impact from a shareholder-friendly perspective."

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