[Click e-Stock] "Pan Ocean, a Hidden Dividend Gem...Maintains 'Buy' Rating"

On December 26, Korea Investment & Securities maintained its 'Buy' investment rating on Pan Ocean, describing it as a "hidden dividend gem" due to a significant decrease in CAPAX (capital expenditures) starting next year.

Choi Goun, a researcher at Korea Investment & Securities, stated in a report released on this day, "It is now time to pay attention to the dividend upside as well."

Choi explained, "Pan Ocean's cash and cash equivalents have increased fourfold to 1.1 trillion won compared to the end of 2020, and from next year, CAPAX will return to its usual levels. Considering even the separate taxation criteria, there is ample room to increase the dividend payout ratio." Currently, the consensus for the consolidated dividend payout ratio stands at 20%, which is the midpoint of the company's guidance range of 15% to 25%. Pan Ocean's dividend record date is at year-end.

Choi also noted, "This year, the bulk shipping market has far exceeded market expectations," and projected, "The demand growth rate in 2026 will see a slight improvement compared to this year." The Baltic Dry Index (BDI) recorded its highest quarterly average since 2022 at 2,164 points in the fourth quarter and is expected to continue its upward trend into 2026.

Earnings improvement is also anticipated. Pan Ocean's operating profit for the fourth quarter is estimated to increase by 17% year-on-year. In particular, Choi attributed this differentiation to the growth momentum of dedicated vessel contracts and LNG carriers, which offer high profitability and stability. On an annual basis, a 4% increase in earnings is also expected.

On the other hand, Pan Ocean's stock price rose by only 6% in the second half of the year. Choi pointed out, "The 2026F price-to-book ratio (PBR) is only 0.37x, and the price-to-earnings ratio (PER) is just 5x. Even considering the chronic discount applied to the traditional bulk shipping industry, the fact that these valuations are only half that of other Asian shipping companies indicates excessive undervaluation."