[Click e-Stock] "Pan Ocean Expected to Maintain Earnings Improvement... Target Price Raised"

Target Price Raised by 7% from Previous Level

On May 7, NH Investment & Securities raised its target price for Pan Ocean from 6,700 won to 7,200 won, citing continued earnings improvement driven by strong bulk shipping market conditions. The company maintained its "Buy" investment rating.

Jeong Yeonseung, a researcher at NH Investment & Securities, said, "We have revised up our operating profit estimates for 2026 and 2027 by 5% and 2%, respectively, reflecting favorable exchange rates and robust market conditions. There is also potential for further profit growth through the purchase of secondhand Very Large Crude Carriers (VLCCs) and the acquisition of long-term contracts."

In the first quarter of this year, Pan Ocean posted sales of 1.5089 trillion won, up 8.3% year-on-year, and operating profit of 140.9 billion won, up 24.4%, both exceeding market expectations. Jeong noted, "Operating profit beat the consensus (the average securities companies’ forecast) by 7%. Although bulk-related costs rose due to a surge in fuel prices in March amid the Iran war, this was offset by increased earnings from the tanker and LNG divisions."

By business segment in the first quarter, operating profit for the bulk division rose 14.2% to 54.7 billion won, tankers increased 41.5% to 28.1 billion won, LNG jumped 49.8% to 47.2 billion won, while containers fell 42.9% to 9 billion won. Jeong added, "In the second quarter, earnings are likely to increase quarter-on-quarter, supported by strong market conditions for MR tankers (petrochemical product carriers), improvements in the Baltic Dry Index (BDI), and easing fuel cost pressures."

It is expected that the expansion of the energy transportation business, combined with strong bulk market conditions due to inflation, will continue to drive earnings improvement. Jeong commented, "The energy transportation business expansion is proceeding as planned, with five MR tankers, three newbuild VLCCs, and ten secondhand VLCCs slated for introduction. The sequential addition of vessels through 2027, together with robust market conditions, will enhance earnings visibility. Considering the potential for rising inflationary pressures and raw material prices in the second half of 2026, strong bulk market conditions are likely to persist for some time. Even with a conservative fleet operation, favorable market trends are expected to be reflected, supporting gradual earnings improvement in the bulk segment."

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