Core Viewpoint - Huachuang Securities initiates coverage on Pacific Shipping (02343) with a "Buy" rating, highlighting its robust operations and potential benefits from the ongoing industry recovery [1] Company Overview - Pacific Shipping is a leading operator of small and ultra-small bulk carriers, focusing on the transportation of minor bulk cargoes. The company has established a fleet that balances scale and flexibility, operating 266 dry bulk carriers by mid-2025, including 121 small handy and 144 ultra-small/very large handy vessels [2] - The company holds a leading market share of 5% and 4% in small handy and ultra-small handy vessels, respectively, based on the capacity of vessels under 20 years old. These vessel types are adaptable and equipped with cranes for self-loading and unloading, allowing access to various ports with shallow waters and narrow channels [2] Market Dynamics - The minor bulk shipping market remains resilient, with stable medium to long-term demand for grain and minor bulk cargoes. The recovery of U.S.-China soybean trade is expected to drive a 4.4% growth in grain shipping volume by 2026, with minor bulk cargo demand growing at 2.0%, outperforming iron ore and coal [3] - On the supply side, the industry is experiencing moderate capacity growth, with small vessels still having potential for replacement. As of January 2026, the order book for bulk carriers is at a 12.5% share, the lowest in over two decades, with Handysize orders at only 8.9%, indicating insufficient capacity renewal [3] Catalysts for Growth - The ongoing interest rate cuts and their correlation with larger vessels are expected to stimulate industry recovery. Historically, the latter stages of interest rate cuts have led to rebounds in BDI, BSI, and BHSI indices, driven by improved liquidity and economic recovery, which boosts physical demand [4] - The Simandou iron ore project is anticipated to significantly increase turnover in the large vessel market, potentially boosting global iron ore shipping demand by 9.4% by 2030. The rising charter rates and second-hand vessel prices in the Capesize market reflect optimistic market expectations, which may also positively impact the small vessel market due to inter-market linkages [4]