The Zhitong Finance App learned that CICC released a research report stating that it will keep Pacific Shipping's (02343) profit forecasts unchanged at US$241 million and US$257 million respectively, maintaining the “outperforming industry” rating and target price of HK$4.54, corresponding to 12.5 times and 11.7 times price-earnings ratios in 2026 and 2027, with 20.7% upside compared to the current stock price. The bank is optimistic about the subsequent performance of small ship freight rates. It believes that a higher rate coverage rate in the fourth quarter will help improve earnings certainty, and that spot rate flexibility will remain even if shipping days are not covered.
CICC's main views are as follows:
The company's recent situation
The company released operating data for the third quarter of 2026: the average daily TCE of Xiaoling and Super Lightweight ships was 16,020 US dollars/day and 17,990 US dollars/day respectively, up 37% and 34% year on year, down 1.2% and 5.7% month on month respectively; the average daily gross margin of operating activities was 2,190 US dollars/day, up about 192% year on year and 24% month on month; the number of operating days was about 6,610 days, down 3% year on year.
Xiaolingbian maintained excess earnings in the third quarter, and Chaolingbian's performance in a single quarter was affected by ship transfers
In the third quarter of 2026, the TCE of small portable ships was 1,350 US dollars/day higher than the market, with a 9% premium; ultra-portable ships were lower than the market of 300 US dollars/day, 2% lower. According to the company's announcement, it is mainly due to the freight difference between the Pacific and the Atlantic Ocean, and the company's early transfer of ships to the high-profit Atlantic market. In the first three quarters of 2026, the TCE of the two types of ships still outperformed the market by 13% and 9%, respectively.
Covering the rise in freight rates in the fourth quarter, supporting the realization of profits throughout the year
According to the company's announcement, as of October 12, 2026, the company had covered 65% and 76% of the promised shipping days for the fourth quarter. The corresponding TCE was 16,480 US dollars/day and 18,960 US dollars/day, respectively, which was 2.9% and 5.4% higher than the actual TCE for the third quarter. The bank believes that the higher coverage rate has increased the certainty of earnings in the fourth quarter. Uncovered shipping still retains the flexibility of spot freight rates, which is expected to benefit from the increase in freight rates in the fourth quarter.
The supply of small boats is relatively moderate, and fleet renewal enhances long-term competitiveness
The bank believes that grain shipments in the fourth quarter, coal reserves in winter, and cargo flow on long routes are expected to support demand. Weather and geographical disturbances will still affect capacity turnover, and it is optimistic about the subsequent performance of small ship freight rates.
According to Clarkson's forecast, in 2027, the total supply of small and ultra-portable ships increased by 3.8%, lower than the 4.4% increase in supply for full-dry bulk carriers. As of the end of September 2026, the two types of ships accounted for 8.7% and 13.6% of orders, respectively, while old ships over 20 years accounted for 14.5% and 13.2%, respectively.
The company continuously optimizes its fleet structure to build long-term competitiveness. According to the company's announcement, the company's 6 small portable ships and 4 new Ultramax ships are expected to be delivered from 2028 to the first half of 2029, and reserves the right to choose 2 dual-fuel Ultramax ships.
Profit forecasting and valuation
The bank maintained its 2026 and 2027 profit forecasts of US$241 million and US$257 million, respectively. The company's current stock price corresponds to the price-earnings ratio of 10.4 times and 9.7 times in 2026 and 2027. The bank maintains a “outperforming industry” rating and target price of HK$4.54, which corresponds to price-earnings ratios of 12.5 times and 11.7 times in 2026 and 2027, with 20.7% upside compared to the current stock price.
Risk Alerts
Global economic growth is declining, and geopolitics are changing.