[Click eStock] "Daehan Shipping, Stock Price Rebound Expected... Investment Rating Up, Target Price Down"

Investment Opinion Upgraded from 'Neutral' to 'Buy'
Target Price Revised Downward by 7.1% Compared to Previous

On the 19th, KB Securities upgraded its investment opinion on Daehan Shipping from 'Hold' to 'Buy,' anticipating a future rebound in the stock price. However, due to the downward revision of earnings forecasts from next year onward, the target price was lowered from 2,800 KRW to 2,600 KRW.

Kang Sung-jin, a researcher at KB Securities, explained, "Although we raised this year's operating profit forecast by 3.5%, we revised downward the operating profit forecasts from 2025 onward, reflecting the poor performance of the consolidated subsidiary bulk carriers and adjustments to the LNG carrier operating profit margin assumptions. However, we upgraded the investment opinion to reflect the recovery of valuation attractiveness."

Daehan Shipping's operating profit for the second quarter of this year recorded 72.2 billion KRW, a 10.6% increase compared to the same period last year, but fell short of market expectations. Researcher Kang said, "This is 16.5% below the consensus (average securities firms' forecast) and 2.5% below KB Securities' previous forecast. The increase in operating profit compared to the same period last year was due to operating profits from tankers and LNG increasing by 73.7% and 21.1%, respectively. The shortfall from consensus is believed to be caused by the failure to realize non-recurring gains related to the sales business," he analyzed.

He expressed optimism about a future stock price rebound. Researcher Kang stated, "The investment points for Daehan Shipping are that 67% of sales consist of dedicated ships and long-term charters, which means low profit volatility due to short-term market fluctuations; financial leverage has been reduced, which will decrease profit volatility; and the stock price has fallen excessively compared to the stability of profits from the core business. At the current point of stock price decline, a future stock price rebound can be expected."

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