Morgan Stanley: Pacific Basin Management Remains Optimistic, Keeps In-Line Rating

Stock News10-16

Morgan Stanley has released a research report maintaining its In-Line rating on Pacific Basin (02343) with a target price of HK$4.22.

The bank noted that Pacific Basin management remains optimistic about the outlook for the fourth quarter of this year and for 2027, preferring spot exposure over locking in forward freight rates at a discount. The bank believes that if the current spot strength persists, it and the market may revise upward their full-year earnings forecasts.

Morgan Stanley mentioned that the dry bulk fleet supply is expected to grow 4.4% in 2027, outpacing demand growth of 3%, and Pacific Basin management expects stricter environmental regulations and operational inefficiencies to help narrow the gap.

In addition, management remains cautious about accelerating vessel acquisitions amid elevated secondhand ship prices, preferring long-term charters with purchase options to retain flexibility. Management also sees limited incentive to accelerate buybacks at current prices, while the enhanced dividend policy allows a payout ratio of up to 100%.

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