Korea Investment & Securities lowered the target price of Daehan Shipping from 3,400 KRW to 2,400 KRW on the 1st.
Since the second quarter, concerns over economic sluggishness have persisted, and the bulk shipping market has shown a weaker-than-expected performance. The Baltic Dry Index (BDI) for dry bulk carriers was adjusted down by 29% since May, giving back the gains from March and April, and tanker freight rates have also fallen by more than 70% from the peak in March.
China's steel demand is still recovering slowly, and grain cargo volumes are falling short of expectations due to drought damage in Argentina. Overall, energy and raw material prices are being adjusted, while uncertainty about the global economy is increasing again. Due to the shipping industry's sensitivity to economic cycles, Daehan Shipping's stock price has been adjusted down by 24% compared to early March.
However, Korea Investment & Securities stated that Daehan Shipping has a revenue structure focused on liner shipping, so it is less affected by spot freight rate fluctuations, and thus maintains a "Buy" investment rating. Choegoun Woo, a researcher at Korea Investment & Securities, said, "Daehan Shipping's liner shipping sales account for more than 90% on a separate basis, and it has been accelerating the introduction of new LNG carriers since last year. We maintain a buy rating because the company is expected to steadily increase profits by overcoming the short-term fluctuations in the spot bulk market."
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