[E-Daily, Reporter Shin Ha-yeon ] On the 17th, EUGENE INVESTMENT & SECURITIES assessed that PanOcean(028670)has entered a phase where its earnings resilience is rising to a new level as it expands the proportion of energy transportation—including tankers and liquefied natural gas (LNG) carriers—within its bulk-focused business structure.

The firm projected that even if Middle East risks subside and freight rates return to normal, the elevated profit levels will persist, supported by stable profit contributions from the expanded fleet of Very Large Crude Carriers (VLCCs) and LNG carriers. No investment opinion or target stock price was provided.

Yang Seung-yun, an analyst at EUGENE INVESTMENT & SECURITIES, stated, “The company has entered a phase of enhanced profitability by expanding the proportion of energy transportation—including tankers and LNG carriers—within its bulk-focused business structure,” adding, “We believe that even if Middle East risks subside and freight rates normalize, the elevated profit levels will persist, supported by the expansion of the VLCC fleet and the stable profit contribution from LNG carriers.”

EUGENE INVESTMENT & SECURITIES forecast PanOcean’s revenue for this year to reach 6.9474 trillion won, a 28% increase year-over-year, and operating profit to rise 42% to 700.4 billion won. It also projected that next year’s operating profit will remain at this year’s elevated level, reaching 703 billion won.

The firm identified the expansion of the VLCC fleet as the key driver of future earnings improvement. PanOcean’s VLCC fleet is scheduled to grow from 5 vessels at the end of the second quarter of this year to 14 vessels next year. This structure includes 10 vessels acquired from SK Shipping, 1 vessel under an existing long-term contract with S-OilCorporation, and 1 vessel under a TC-Out arrangement, with 2 newly built VLCCs set to enter the spot market in the second half of next year.

Analyst Yang explained, “While the expansion of long-distance crude oil procurement from regions such as the U.S. and Africa—driven by disruptions in Middle Eastern crude oil supplies—is driving an increase in ton-miles, effective shipping capacity remains limited due to shadow fleet restrictions.” He added, “Since the full-scale delivery of VLCCs currently on order is concentrated after 2029, we believe favorable market conditions will persist through 2028.”

Accordingly, the two newly built VLCCs set to enter the spot market in the second half of next year are estimated to contribute approximately 30 billion won to next year’s annual operating profit. Annual operating profit in the tanker segment is projected to increase by 20%, from 161 billion won this year to 192.8 billion won next year. The 13 LNG carriers are also expected to generate approximately 160 billion won annually through 2028, based on long-term charter contracts, with an operating profit margin exceeding 40%.

The bulk segment, the company’s core business, is also expected to provide a floor for profits. According to the analysis, 41 of PanOcean’s 81 bulk-carrying vessels are deployed under long-term contracts and can generate approximately $100 million in annual operating profit regardless of market conditions. The break-even point (BEP) for the remaining 40 vessels in the marketing fleet was assessed to be at a Baltic Dry Index (BDI) level of 1,200–1,300 points; given the current BDI of 3,561 points, high profitability is expected.

Researcher Yang stated, “For Capesize vessels, tight supply and demand conditions are expected to persist due to increased long-haul cargo volumes from West Africa to China resulting from expanded iron ore production at Simandou, coupled with limited spot vessel capacity,” adding, “For container ships, operations are primarily focused on feeder vessels within the intra-Asian region; since recent newbuilding orders have concentrated on large vessels, the sector is relatively free from medium- to long-term supply pressures.”

He also projected that as investment burdens peak, the potential for expanded shareholder returns will increase. While capital expenditures this year are estimated at 1.269 trillion won, they are expected to decline to 364 billion won next year.

Researcher Yang stated, “As the investment burden peaks in 2026 and begins to ease, we are focusing on the potential for increased profit capacity to lead to expanded shareholder returns,” adding, “We believe it is highly likely that both the upper and lower limits of the existing dividend guidelines will be raised in the three-year dividend policy scheduled to be announced early next year.”

EUGENE INVESTMENT & SECURITIES estimated next year’s dividend per share (DPS) at 225 won, applying a revised dividend payout ratio of 24%. This is approximately 22% higher than the market consensus of 185 won. Analyst Yang emphasized, “Despite favorable market conditions and improved earnings resilience, the PBR remains at around 0.5x, representing an attractive valuation range,” adding, “We believe a valuation re-rating is possible if expanded shareholder returns materialize.”