[Click eStock] "Daehan Shipping, 1Q Surprise Earnings"... Target Price Up
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[Asia Economy Reporter Lee Jung-yoon] Daishin Securities maintained a buy rating on Daehan Shipping on the 23rd, upgrading its annual earnings forecast due to improved first-quarter performance this year and raising the target price from the previous 3,600 KRW to 4,500 KRW.
Daehan Shipping's first-quarter sales increased by 55.1% year-on-year to 349.8 billion KRW, and operating profit rose by 80.6% to 73.6 billion KRW. These figures exceed Daishin Securities' estimates by 68.2% and the market consensus (estimates) by 264%.
The reason Daehan Shipping recorded better-than-expected first-quarter results is due to significant improvements in the performance of its consolidated subsidiaries: Daehan Shipping Lines, Changmyeong Shipping, and Daehan Shipping LNG, which improved by 163%, 524.7%, and 35.3%, respectively.
Additionally, factors contributing to the earnings increase include the freight rate rise due to oil price increases in the dedicated vessel sector, the consolidation of Changmyeong Shipping, and the weak Korean won. Daehan Shipping Lines and Daehan Shipping, which mainly operate dedicated vessels, were able to pass most of the oil price increases on to shippers, resulting in increased sales. First-quarter dedicated vessel sales rose 37.8% year-on-year to 176.9 billion KRW.
Yang Ji-hwan, a researcher at Daishin Securities, explained, "Performance improvement is expected to continue in the second quarter and the second half of this year due to the recovery of the bulk market."
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Looking at the consolidated business segments, bulk segment sales increased by 84.5% year-on-year to 188.6 billion KRW, and operating profit rose 163% to 51.9 billion KRW. LNG segment sales increased by 61% to 64.3 billion KRW, with operating profit up 35% to 13 billion KRW. The tanker segment recorded sales growth of 36% to 31.6 billion KRW and operating profit growth of 20% to 8.6 billion KRW.
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