PSL Gains 8% as 2Q21 Performance Making a Turnaround to Profit of ฿826Mn

The share price of Precious Shipping Public Company Limited (PSL) rose ฿1.80/share or 7.83% to ฿24.80/share as of 11:49 local time in Thailand, with a trading value of 1,098 million baht.

A spike in PSL’s share price was in response to a solid 2Q21 performance result. A total revenue for the three months period ended June 30, was 1,971.62 million baht, compared to a total revenue of 700.47 million baht in the same period of last year., boosting PSL’s earnings to record 826.31 million baht, compared to earnings of 1,183.07 million baht in the same period of last year.

The main reasons for the changes are the net vessel operating income (vessel operating income net of voyage disbursements and bunker consumption) in 2Q21 was 192% higher than the net vessel operating income in 2Q20. This is mainly due to an increase in the average earnings per vessel per day which increased from USD 6,099 in 2Q20 to USD 17,841 in 2Q21, due to a resurgent Dry Bulk Freight market.

KTBST Securities (KTBST) reiterates a BUY rating on PSL but raise target price to 26.00 baht from 24.00 baht while derating PER multiples to 22.0x (+0.25 SD above its 5-yr average) from 24.0x, as KTBST roll forward its valuation to 2022E base, which it view as more appropriate than a phenomenal growth in 2021E.

KTBST raised 2021E net profit forecast by 98% to 3.1 billion baht as it revised i) total revenue estimate up by 33% to 8.3 billion baht to reflect its high TC rate of USD22,291/day YTD, whereas KTBST adjusts TC rate up to USD19,164/day, from USD14,164 earlier, which already factored in baht weakness; and ii) gross profit margin estimate up to 50.0% (47.4% in 1H21) in expectation of a still-high freight rate in 3Q-4Q21E.

KTBST also upgraded 2022E earnings forecast by 44% to 1.81 billion baht following an increase in TC rate assumption to USD15,331/day from USD13,456 and gross profit margin to 42%, as it expects freight rate to gradually return to its normal level.