Huachuang Securities: Maintaining Pacific Shipping's (02343) “Recommended” Rating Target Price of HK$5.05
The Zhitong Finance App learned that Huachuang Securities released a research report saying that Pacific Shipping (02343) is a leading small-scale shipowner with steady operations and crossing the cycle, and is expected to benefit from a steady rise in the booming economy. Considering that the dry economy exceeded expectations, the company raised its 2026-2027 net profit forecast to be US$2.55 and 273 million, respectively, and the net profit forecast for 2028 was added to US$312 million. The corresponding EPS was 0.05, 0.05, and 0.06 US dollars, respectively, and the corresponding PE was 10, 9, and 8 times, respectively. Assuming a 100% dividend ratio, the corresponding dividend rates for 26-28 are 9.9%, 10.6%, and 12.1%, respectively. The target price for the company is HK$5.05, which is expected to increase 29% from the current price, maintaining the “Recommended” rating.
The main views of Huachuang Securities are as follows:
The company released its 2026 interim report
1. Performance situation: 26H1 achieved operating income of US$1.11 billion, +8.5% YoY; net profit of US$105 million, +310% YoY. By business, 1) core business, the average rental rates for the company's Xiaolingbian and Chaolingbian ships were 14,150 US dollars/day, respectively, up 28.5% and 35.3% year-on-year, and the performance index was 16% and 17%; 2) Operating activities had an average daily profit of 1,060 US dollars, +49% year-on-year. 2. Dividends and repurchases. The company announced an interim dividend of HK$0.155 per share, with a dividend ratio of 100% (excluding proceeds from the sale of cargo ships, same below), and completed a share repurchase of 3.5 million US dollars in the first half of the year. 3. 26Q3 contract situation: The contract ratios for the core business of 26Q3 were 78% and 82% respectively, and the average daily rent was 15,810 and 18,680 US dollars/day, respectively, which is a further increase from the average in the first half of the year.
Overall, the dry dispersion industry showed a high boom in the first half of the year, with 26H1 BDI averaging 2,347 points, or +82%; 26Q2 BDI averaging 2,751 points, +87% year-on-month, and +41% month-on-month. Among them, the BDI index accelerated upward since April and broke through 3,000 points in May; on the cargo side, iron ore transportation was supported by long-distance route demand, and coal transportation demand was boosted by factors such as bauxite and grain.
The company's performance also exceeded expectations, and the core fleet TCE continued to outperform the market
At the same time, the company previously implemented a dividend policy with a minimum dividend ratio of 50% for a long time. Since '26, the dividend policy has been revised to be at least 50%. If net cash at the end of the year is positive, the dividend ratio will increase to 100%; the company's dividend ratio for the first half of '26 was raised to 100% over the period, and the dividend ratio is attractive.
Continue to be optimistic about the market potential of the dry market
The supply-side growth rate is limited. Clarksons expects the industry's capacity growth rate to be 3.8% and 4.2% respectively in 26-27, and the capacity growth rate of the Cape of Good Hope ships will be only 2.4% and 4.2%; against the backdrop of stricter environmental policies, the speed of bulk carriers continues to decline, and the increase in the number of special inspection vessels affects effective capacity. The commissioning of Simandou iron ore forms the core catalyst. The Simandou iron ore is a super iron ore project in which Chinese companies are deeply involved, and it is expected to break the current pattern of iron ore supply dominated by Australia and Pakistan. Pay attention to the potential impact of extreme weather on El Niño, which may cause the water level of the Panama Canal to drop, which in turn affects traffic efficiency or even detour.
Risk warning: macroeconomic downturn, oversupply of capacity, large fluctuations in oil prices, geographical risks, etc.