Shipping Stocks Rally as Freight Rate Soars, PSL-TTA-RCL Lead Gain

Sea freight and logistics stocks edged higher in the morning session on Tuesday, July 27, as the Baltic Dry Index (BDI) continues to rise to new highs.

As of 10:49 local time in Thailand, Precious Shipping Public Company Limited (PSL) rose ฿1.30/share or 6.19% to ฿22.30/share with a trading value of 456 million baht.

Thoresen Thai Agencies Public Company Limited (TTA) rose ฿0.80/share or 5.44% to ฿15.50/share with a trading value of 359 million baht.

Regional Container Lines Public Company Limited (RCL) rose ฿2.75/share or4.85% to ฿59.50/share with a trading value of 1,000 million baht.

KGI (Thailand) Securities (KGI) has given a “Speculative-Buy” recommendation on RCL with a target price of 60 baht, based on the expectation that earnings momentum will continue over the next two quarters (2Q-3Q2021) as global demand for logistics recovers at a fast pace and Thailand’s exports expand despite a limited supply of container ships. As a result, recent freight rates have reached new highs.

Meanwhile, KGI Taiwan anticipates an acceleration in global product restocking through at least the middle of next year, with the trailing PE 10x projected to fall further following the 2Q-3Q earnings report.

The support level is given at 56 baht, while the resistance is 58 baht. If the share could beat the resistance, RCL has a chance to challenge the next resistance level of 65 baht (Stop loss 54 baht).

DBS Vickers Securities (DBSVS) stated that a spike in freight rates has fueled PSL’s net profit. With a new record of BDI and BHSI in 11 years, PSL’s earnings could expand to 2.6 billion baht in 2021 and 3.3 billion baht in 2022, compared to a loss of 590 million baht in 2020, based on the assumption that TC Rate this year will grow 97% YoY and next year will grow 9% YoY.  DBSVS has given a target price of 22.70 baht.