Core 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]

Core Insights - Delta Air Lines has reissued its full-year earnings guidance after three months, indicating a recovery in airline demand from the initial impacts of the Trump trade war [1] - The company expects adjusted earnings per share (EPS) for the year to be between $5.25 and $6.25, with the midpoint exceeding analysts' average expectation of $5.35 [1][4] - Delta reported adjusted EPS of $2.10 for the second quarter, surpassing analysts' average estimate of $2.07, while quarterly revenue remained flat compared to the previous year [1][5] Group 1: Financial Performance - The strong performance in the second quarter is attributed to high-margin business segments, including international premium cabin ticket sales, loyalty program credit card spending, and cargo operations, which collectively contributed 59% of total sales [5] - For the third quarter, Delta anticipates adjusted EPS between $1.25 and $1.75, slightly below analysts' average expectation of $1.33, with revenue expected to remain flat or grow by 4% [4] Group 2: Market Conditions - Despite the recovery in demand, it remains below earlier industry expectations, as Delta was the first U.S. airline to withdraw its full-year guidance three months ago due to global trade and economic uncertainties [4] - The airline industry has faced challenges this year, including a series of incidents and a decline in domestic travel due to economic and trade uncertainties [6] - Delta plans to slow capacity growth after the summer peak season in collaboration with other airlines to improve ticket prices [6]