[Click eStock] "Pan Ocean Still Cheap... Target Price Up 21%"

Shinyoung Securities Report

[Asia Economy Reporter Minji Lee] Shin Young Securities maintained a buy rating on Pan Ocean on the 24th and set a target price of 8,500 KRW, reflecting a 21% increase.

With the BDI surpassing the 2,300 mark and continuing its high-level rally, it is analyzed that Panamax and Supramax freight rates are driving the overall freight rates due to the strong market conditions for small and medium-sized vessels. Until now, the market has mainly focused on investments in large vessels, resulting in very shallow order backlogs for smaller vessel types, but going forward, structural increases in freight rates are expected due to supply-demand imbalances in small and medium-sized vessels.

Researcher Kyungah Eom of Shin Young Securities said, "The market is not being influenced by the volatile large vessels but is rather showing a solid upward trend," adding, "Although the dry bulk market’s dependence on major cargoes (iron ore, coal), which were influenced by the expansion and contraction of the steel industry in Northeast Asia, has decreased, it will be affected by the growth of grains and minor cargoes."

Additionally, the trend of expanding the operating fleet continues, which is positive. Pan Ocean, which operated a fleet of 217 vessels at the end of last year, is understood to have recently increased its operating fleet to about 240 vessels. While the company may not fully benefit from the increased freight rates in the first quarter, it is expected to enjoy the effects of both freight rate increases and fleet expansion in the second quarter. First-quarter sales are expected to increase by 13.8% year-on-year to 636 billion KRW, and operating profit is expected to rise 46% to 55.4 billion KRW.

Researcher Eom stated, "The actual business conditions are analyzed to be better than in 2017," and added, "The shares that JKL Part, a financial investor, acquired at the time of Harim Group’s acquisition have all come onto the market, resolving the supply burden entirely."

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