Korea Investment & Securities forecasted on the 14th that Pan Ocean's performance is expected to improve this year due to the recovery of the bulk shipping market. They maintained a 'Buy' investment rating and a target price of 6,700 KRW.
Pan Ocean recorded sales of 1 trillion KRW and an operating profit of 68.7 billion KRW in the fourth quarter of last year, down 8% and 14% respectively compared to the same period the previous year. The operating profit fell short of market expectations by 34%.
Choi Go-woon, a researcher at Korea Investment & Securities, explained, "Despite the rise in the Baltic Dry Index (BDI), the profit from dry bulk carriers decreased compared to the previous quarter. Pan Ocean took a conservative view of the market conditions in the fourth quarter of last year and reduced its fleet size, and it is estimated that the profitability of the spot chartering segment worsened compared to the previous quarter."
Meanwhile, Choi evaluated that the BDI has already rebounded beyond expectations. "The BDI in February is around 1,500 points, which is the worst off-season of the year due to the Chinese Lunar New Year holiday, yet it exceeds last year's annual average. As the Chinese real estate market recovers, the bulk shipping market is expected to improve this year, and Pan Ocean's operating profit is also expected to turn around," he said.
He added, "The burden of the paid-in capital increase for the acquisition of HMM has disappeared, but the investment demand that left during this process has not yet fully returned. Once the BDI starts to rebound after the Lunar New Year, investment sentiment is also expected to recover, highlighting the attractiveness of undervaluation and expectations for shareholder returns."
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