The market has already recognized the impressive freight rate outlook and priced it in. However, we suggest letting profits run, given the positive sentiment toward the stock during this up-cycle in the dry bulk shipping market and speculative flows in anticipation of the possibility of PSL paying a dividend for the first time since 2015. As such, although the current market price is slightly above our target, we maintain our HOLD call.
Biggest core profit in more than a decade
PSL reported a 1Q21 net profit of Bt375m, a YoY turnaround and up strongly QoQ from anemic 4Q21 net earnings. The reported bottom-line beat our estimate by 13% (the firm marked heavier FX gains than assumed), but missed the consensus by 6%. Stripping out extra items, the core number would be Bt271m, a YoY turnaround and up 321% QoQ—the highest core profit since 4Q09. The core number missed our estimate by 18% (lower T/C rates for the Supramax and Ultramax classes than assumed) and the street by 51%.