[Click eStock] “Pan Ocean, Surprise Q2 Earnings Expected”

Daishin Securities "Maintain Pan Ocean Target Price at 9,000 Won"
Not Participating in Eastar Jet Acquisition... Expectation of Improved Investment Sentiment

[Asia Economy Reporter Gong Byung-sun] Pan Ocean is expected to record record-breaking performance in the second quarter of this year. It is also predicted that investment sentiment will improve due to non-participation in the Eastar Jet acquisition battle and the resumption of dry bulk market upturn. Daishin Securities maintained a target price of 9,000 KRW and a 'Buy' rating for Pan Ocean.

According to Daishin Securities on the 24th, Pan Ocean's operating profit in the second quarter is expected to exceed market expectations by more than 15%. Pan Ocean's second-quarter sales are projected to increase by 37.3% year-on-year to 938.6 billion KRW, and operating profit is expected to rise by 47.1% to 94.5 billion KRW.

The reason for the improvement in second-quarter performance is the leverage effect from proactively secured 6 to 12-month time charters. The average Baltic Dry Index (BDI) in the second quarter was above 2,700 points, rising by nearly 1,000 points compared to the same period last year. In addition, aggressive hub operations significantly increased the operating fleet, contributing to positive second-quarter results. In fact, Pan Ocean's operating fleet in the second quarter totaled 274 vessels, an increase of 65 vessels compared to the same period last year. This is also a significant increase from the 254 vessels in operation in the first quarter.

Investment sentiment is also expected to improve due to non-participation in the Eastar Jet acquisition and the resumption of the dry bulk market upturn. The recent stock price adjustment was due to participation in the Eastar Jet acquisition battle and the Chinese authorities' announcement of regulations to stabilize raw material prices, despite expectations for dry bulk market and performance improvement.

In the second half of the year, if China's dependence on Australian iron ore imports decreases, a market upturn led by large Cape-size vessels is expected. From January to May this year, China's imports of Australian iron ore accounted for about 69.3% of total imports, indicating a very high dependence. Due to current political conflicts between China and Australia, China is likely to increase imports from Brazil (17.7%), the second-largest iron ore supplier, and India (3.4%), the third-largest supplier.