[Click eStock] "Disappointing Dividend Payout Ratio... Pan Ocean, Target Price Down"

On the 20th, NH Investment & Securities downgraded the target price of Pan Ocean from 6,000 KRW to 5,300 KRW, a 12% decrease, stating that "although the valuation (price level relative to corporate value) is at a historic low, a rebound in the Chinese economy or an expansion of the dividend payout ratio is necessary." The investment opinion 'Buy' was maintained.

On the same day, Jeong Yeon-seung, a researcher at NH Investment & Securities, said, "The third-quarter earnings this year are expected to slightly miss market expectations. In the fourth quarter, the impact of freight rate declines is inevitable."

The bulk carrier freight index stands at 1,890 points, 19.3% higher than last year, but the increase in freight rates is limited due to sufficient iron ore port inventory. Researcher Jeong said, "Third-quarter sales are expected to be 1.2233 trillion KRW, a 10% increase compared to the same period last year, and operating profit is expected to be 126.1 billion KRW, a 58.7% increase, showing solid performance, but it is forecasted to fall 4% short of market expectations."

The bulk carrier fleet size is planned to be slightly expanded to 230 vessels in the third quarter according to a short-term charter-focused strategy. However, in the fourth quarter, declines in container and tanker freight rates are expected to be unavoidable. In particular, the global economic slowdown and sluggish Chinese economy are expected to weaken earnings momentum.

From the second half of this year, the delivery of liquefied natural gas (LNG) carriers will diversify the profit structure, but currently, the profit structure heavily depends on bulk carriers. Researcher Jeong evaluated, "The current stock price is at a historic low price-to-book ratio (PBR) of 0.38 times. The stock price rebound is expected to be limited," adding, "The dividend payout ratio is also low compared to peer companies."