Zhi Tong Cai Jing·2025-09-23 03:51Core Viewpoint - Morgan Stanley initiates coverage on Pacific Basin Shipping (02343) with an "Overweight" rating and a target price of HKD 3.2, citing potential demand recovery by 2026 despite short-term TCE price pressure due to U.S. tariffs [1] Group 1: Market Dynamics - U.S. tariffs are prompting early shipments, which may pressure TCE prices in the second half of the year [1] - A restocking cycle and a rebound in small bulk demand driven by the construction industry are expected to support demand recovery by 2026 [1] - Global fleet expansion is slowing to approximately 3%, with an increase in the scrapping of older vessels due to aging [1] Group 2: Company Positioning - The company's positioning in the small vessel segment is defensive, benefiting from a diverse cargo mix and flexible port access [1] - Stable fuel costs are expected to enhance profit visibility for the company [1] - The impact of disruptions in the Red Sea on bulk shipping is minimal, with only about 3% of dry bulk passing through the region, significantly lower than oil and refined products [1] Group 3: Competitive Analysis - The company is viewed more favorably than Cosco Shipping Energy (600026) (01138) in the dry bulk and tanker segments due to lower exposure to geopolitical risks and stable capital expenditures [1] - The company's exposure to U.S. Section 301 tariff risks is limited, further enhancing its competitive position [1]