[Alpha Biz= Ellie Kim] NH Investment & Securities on May 6 raised its target price for Pan Ocean to KRW 7,200 from KRW 6,700, maintaining a “Buy” rating, citing improving earnings driven by expansion in energy transport and strengthening dry bulk market conditions.

Analyst Jung Yeon-seung said the company’s energy transport business is progressing as planned, with fleet expansion underway. Pan Ocean plans to introduce five MR tankers, three new VLCCs, and 10 second-hand VLCCs by 2027, which is expected to enhance earnings visibility alongside favorable market conditions.

Dry Bulk Market Strength Gains Momentum

The outlook for the dry bulk segment is also improving. The Baltic Dry Index (BDI) reached 2,730 points as of May 1, marking its highest level this year.

Strong demand for iron ore and bauxite shipments to China, combined with supply-side constraints, has supported freight rates. The brokerage expects the bulk market to remain stronger than previously anticipated, particularly as inflationary pressures and rising commodity prices persist into the second half of the year.

Earnings Beat and Positive Near-Term Outlook

Pan Ocean reported solid first-quarter results, with revenue of KRW 1.51 trillion (+8.3% YoY) and operating profit of KRW 140.9 billion (+24.4% YoY), beating market consensus by 7% on an operating profit basis.

Although fuel costs surged in March due to geopolitical tensions, higher earnings from tanker and LNG segments offset the burden. NH Investment & Securities expects further earnings growth in the second quarter, driven by strong MR tanker rates, improving bulk conditions, and easing fuel cost pressures.

 

 

 

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