Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 3.50 [1] Core Views - The company reported a revenue of USD 2.08 billion for 2025, a decline of 19.4% year-on-year, and a net profit attributable to shareholders of USD 58.17 million, down 55.8% year-on-year. The lower-than-expected daily freight rates were the main reason for the profit decline [1] - The geopolitical situation in the Middle East is expected to increase concerns over global energy and trade supply chain disruptions, potentially leading to a significant rise in dry bulk freight rates and boosting the company's profitability in 2026 [1] - The company announced a new dividend policy starting in 2026, with a maximum payout ratio of 100% if the balance sheet shows net cash at year-end, reflecting a commitment to shareholder returns [2] Summary by Sections Financial Performance - In 2025, the Baltic Dry Index (BDI) and the Baltic Handysize Index (BHSI) saw average declines of 4.2% and 5.9% respectively due to weak global demand in the first half of the year. However, in the second half of 2025, freight rates rebounded significantly, with BDI and BHSI increasing by 23.4% and 9.2% year-on-year, respectively [3] - The company achieved a net profit of USD 32.57 million in the second half of 2025, which was a 56.0% decline year-on-year but a 27.2% increase quarter-on-quarter [3] Market Outlook - The geopolitical risk premium is expected to drive global shipping prices significantly higher due to increased safety risks and the reallocation of shipping capacity. The market's concerns about supply chain disruptions are likely to persist, which could lead to a rise in dry bulk freight rates [4] - Year-to-date, the BDI has increased by 107.7% compared to the previous year, indicating a strong recovery in freight rates [4] Earnings Forecast - The earnings forecast for 2026 has been revised upwards by 36% to USD 150 million, reflecting the anticipated rise in dry bulk freight rates due to geopolitical disturbances. The net profit forecasts for 2027 and 2028 are maintained at USD 130 million and USD 110 million, respectively [5] - The target price has been adjusted upwards by 17% to HKD 3.50 based on a price-to-book ratio of 1.3x for 2026 estimates, considering the current market conditions influenced by geopolitical events [5]

Core Viewpoint - Pacific Shipping (02343) shows a near 3% increase in stock price, with a current price of HKD 2.54 and a trading volume of HKD 25.52 million, following the release of its Q3 2025 operational data [1] Group 1: Operational Performance - The company's small handy-sized bulk carrier time charter equivalent (TCE) daily net rental decreased by 15% year-on-year to USD 11,680, while the ultra-handy-sized bulk carrier TCE increased by 10% year-on-year to USD 13,410 [1] - For Q4 2025, the company expects the daily net rental for small handy-sized bulk carriers and ultra-handy-sized vessels to improve to USD 12,380 and USD 14,060 respectively, with 72% and 87% of operational days already locked in [1] Group 2: Market Outlook - Daiwa Securities views the increase in port fees in China as a positive factor driving up bulk freight rates and acknowledges the company's proactive approach in dealing with uncertain operational environments [1] - Bank of America Securities notes that the Q3 performance of Pacific Shipping was generally in line with expectations, with slightly weak freight rates, but an improvement in locked freight rates for Q4 [1] - The company is expected to be exempt from paying port fees in the US and China, although regulatory uncertainties remain until further discussions with regulatory bodies are concluded [1] - Bank of America has raised the earnings per share forecast for Pacific Shipping for 2025 to 2027 by an average of 7% to reflect strong performance in the spot market for Q4 [1]

Group 1: Company Performance and Forecast - Daiwa has raised the earnings per share forecast for Pacific Basin Shipping (02343) by 5% to 13% for the next two years, maintaining a "Buy" rating due to low valuation and ongoing share buybacks [1] - The 12-month target price has been increased to HKD 3 from HKD 2.65, based on a price-to-book ratio of 1 times (previously 0.9 times) [1] - In Q3 2025, the average net charter rate for Handysize vessels decreased by 15% year-on-year to USD 11,680 per day, while Supramax vessels saw a 10% increase to USD 13,410 per day [1] Group 2: Market Trends and External Factors - Daiwa views the increase in port fees for US-related vessels announced by China on October 10 as a significant potential impact on the dry bulk market, given that China accounts for 40% of global dry bulk imports in 2024 [2] - The increase in port fees is seen as a positive factor for driving up dry bulk freight rates, and the company acknowledges the proactive measures taken by Pacific Basin Shipping in response to the uncertain operating environment [2]

Group 1 - Daiwa has raised Pacific Basin Shipping's (02343) earnings per share forecast for the next two years by 5% to 13%, reiterating a "Buy" rating due to low valuation and ongoing share buybacks [1] - The 12-month target price has been increased to HKD 3 from HKD 2.65, based on a price-to-book ratio of 1 times (previously 0.9 times) [1] - The company reported a 15% year-on-year decline in average net charter rates for Handysize vessels to USD 11,680 per day, while Supramax rates increased by 10% to USD 13,410 per day [1] Group 2 - Daiwa noted that China's announcement on October 10 to increase port fees for U.S. vessels could significantly impact the dry bulk market, as China accounts for 40% of global dry bulk imports in 2024 [2] - The increase in port fees is viewed as a positive factor for driving up dry bulk freight rates, and the company acknowledges the proactive measures taken to address the uncertain operating environment [2]