Bank of America Securities downgrades The Pacific Shipping (02343) to "Neutral" and lowers the target price to HK$1.65.

Bank of America Securities released a research report stating that they are downgrading their rating on The Pacific Shipping (02343) from "buy" to "neutral" and lowering the target price from 2.85 Hong Kong dollars to 1.65 Hong Kong dollars. The bank noted that bulk cargo has entered a downward cycle this year, and the company's locked-in freight rates in the first quarter of this year decreased year-on-year. The bank expects the company's profits to decline year-on-year, with a 50% downside compared to market expectations. The bank also pointed out that the company's decision not to declare a special dividend in 2024 was disappointing, indicating that previous share buybacks were essentially dividend substitutions rather than additional returns. However, the bank believes that most of the negative factors have already been priced in by the market, with the current valuation close to 0.55 times book value, near the lower end of the company's historical trading range. They have reduced their earnings forecasts for The Pacific Shipping for the next two years by 50% to reflect the weak locked-in freight rates in the first quarter of this year and increasing signals of a downward cycle in bulk cargo this year.