PACIFIC SECURITIES(SH:601099) Ge Long Hui·2025-08-10 03:33Core Viewpoint - Pacific Shipping reported a significant decline in net profit for the first half of 2025, primarily due to weak global dry bulk market demand and falling freight rates [1][2]. Group 1: Financial Performance - The company’s net profit attributable to shareholders was $25.6 million, down 55.6% year-on-year [1]. - The adjusted net profit was $21.9 million, a decrease of 50.1%, which was below expectations [1]. - Average daily freight rates for the company's handy and super handy bulk carriers fell by 6.8% and 10.7%, respectively, due to weak demand and oversupply [1][2]. Group 2: Market Outlook - The company anticipates a seasonal demand increase in the second half of 2025, which may stabilize freight rates [1]. - Long-term prospects depend on the U.S. interest rate cuts and a boost in China's domestic demand, which could enhance global bulk demand and freight rates [1][2]. - The global dry bulk shipping market is expected to see a slight recovery in profitability from 2026 to 2027, driven by improved market conditions and liquidity in the Hong Kong stock market [1][3]. Group 3: Operational Metrics - The number of operating days for the company's handy and super handy vessels decreased by 7.4% and 5.5%, respectively, due to the disposal of older ships [2]. - The fleet capacity as of June 30 was 108 owned vessels, down 6.1% year-on-year, with long-term chartered vessels also declining by 11.8% [2]. Group 4: Profit Forecast Adjustments - The profit forecasts for 2025, 2026, and 2027 have been revised downwards by 53.0%, 39.9%, and 24.4%, respectively, reflecting the current market conditions [3]. - The price-to-book (PB) ratio has been adjusted upwards to 0.9x for 2025, leading to a target price increase of 19% to HKD 2.5 [3].