Morgan Stanley: The Pacific Shipping (02343) management maintains an optimistic outlook; maintain "In-line with the market" rating.

Morgan Stanley released a research report maintaining an "In-line with the market" rating on The Pacific Shipping (02343) with a target price of HK$4.22. The bank noted that The Pacific Shipping's management remains optimistic about the outlook for the fourth quarter of this year and 2027, preferring spot exposure rather than locking in forward freight rates at a discount; the bank believes that if the current spot strength persists, it and the market may upwardly revise full-year earnings forecasts. Morgan Stanley mentioned that dry bulk fleet supply is expected to grow 4.4% in 2027, exceeding demand growth of 3%, and The Pacific Shipping's management expects stricter environmental regulations and operational inefficiencies to help narrow the gap. In addition, management remains cautious about accelerating vessel purchases amid high secondhand ship prices, preferring long-term charters with purchase options to preserve flexibility, and believes there is limited incentive to accelerate buybacks at current prices, while the enhanced dividend policy allows a payout ratio of up to 100%.