Sangsangin Securities has raised its target price for Pan Ocean from 8,000 won to 9,000 won, reflecting the strong performance of tanker rates across all vessel types and the long-term contracts for Very Large Crude Carriers (VLCCs). The ongoing conflict between the U.S. and Iran is expected to bolster tanker market conditions, contributing to improved performance in the bulk and container sectors, leading to a forecast that third-quarter operating profit will exceed market expectations.
Sangsangin Securities predicts that Pan Ocean's consolidated revenue for the third quarter will reach 1.9336 trillion won, a 52% increase from the same period last year, while operating profit is expected to rise by 58% to 197.4 billion won. The operating profit margin is projected to be 10.2%, surpassing market consensus.
The primary driver of this performance improvement is the strong tanker market. Lee Seo-yeon, a researcher at Sangsangin Securities, stated, "Pan Ocean is benefiting from strong rates across all vessel types, particularly from long-term VLCC contracts secured at high rate levels, which will support long-term profit growth."
Lee added, "The profitability of MR tanker spot contracts has significantly improved, and the VLCCs acquired from SK Shipping will begin to contribute to earnings in earnest. We expect the profit contribution from the tanker sector to expand rapidly."
Additionally, the VLCCs acquired from SK Shipping are expected to positively impact earnings, with Pan Ocean set to receive four of these vessels this quarter. Consequently, profits based on long-term contracts are anticipated to grow. Sangsangin Securities estimates that Pan Ocean's tanker sector revenue will increase by 76% year-on-year to 133 billion won, with operating profit rising by 139% to 48.5 billion won.
The bulk and container sectors are also expected to maintain solid performance. The Baltic Dry Index (BDI) remains 54% higher year-on-year in the third quarter, driven by increased ton-mile from Brazilian iron ore and the Simandou project, along with rising demand for dry bulk cargo. As a result, revenue and operating profit in the bulk sector are projected to increase by 30% and 55%, respectively.
* This article has been translated by AI.
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