Hana Securities Maintains Buy on Pan Ocean, Eyes VLCC Expansion

Hana Securities has reiterated its "Buy" rating on Pan Ocean (KOSPI: 028670) with a target price of 9,000 won, forecasting that the South Korean shipping group's third-quarter operating profit will reach 184.9 billion won — a 48% increase year on year.

In a report published on 1 October 2026, analyst Ahn Do-hyun estimated Pan Ocean's third-quarter revenue at 1.785 trillion won, up 41% from a year earlier. The operating margin is expected to hold at around 10.4%, broadly in line with the 10.1% recorded in the previous quarter.

Segment by segment

The bulk shipping division is forecast to post operating profit of 80 billion won, up 45% year on year, driven primarily by the Baltic Dry Index (BDI) averaging 3,000 points during the quarter — its highest level since 2022. The tanker division is expected to surge 122% to 45 billion won, as ten very large crude carriers (VLCCs) acquired from SK Shipping begin to be reflected fully in the financials from the third quarter onwards. The LNG carrier and container shipping divisions are each projected to contribute around 45 billion won and 15 billion won in operating profit, respectively, broadly unchanged from the prior quarter.

The VLCC opportunity

The most closely watched aspect of Pan Ocean's outlook is the growth potential of its VLCC fleet. The company recently disclosed that it had chartered out one VLCC at a daily rate of $100,000. Given that daily operating costs per vessel are estimated at below $25,000, a single such charter contract could generate more than 37 billion won in annual operating profit. When the ten vessels acquired from SK Shipping are combined with two newbuilds due for delivery in 2027, Hana Securities estimates that the VLCC division alone could generate 128 billion won in annual operating profit by 2027.

Upgraded earnings forecasts

On the strength of these projections, Hana Securities has raised its full-year operating profit estimates for Pan Ocean to 703.1 billion won in 2026 and 746.3 billion won in 2027 — beating market consensus of 680.6 billion won and 689.6 billion won by 3.3% and 8.2%, respectively. The trajectory is striking: from 471.2 billion won in 2024 and 491.9 billion won in 2025, operating profit is expected to leap to 703.1 billion won in 2026.

Geopolitics as a tailwind

The Middle East conflict has acted as a catalyst across all of Pan Ocean's divisions, pushing freight rates higher. Hana Securities argues that even after a ceasefire, demand for crude tankers is likely to remain elevated as energy inventories are replenished. Container shipping is also expected to sustain above-historical margins, supported by resilient demand for feeder vessels.

Risks to consider

Investors should weigh several counterbalancing risks. A BDI of 3,000 points has historically proved difficult to sustain: the index plummeted from above 5,000 in 2022 to around 1,000 in 2023. Hana Securities itself acknowledges the possibility of bulk shipping rates easing back.

Currency movements pose an additional hazard. Since shipping revenues are denominated in US dollars, any appreciation of the Korean won against the dollar would weigh on earnings when translated back into local currency. The report suggests that post-conflict freight market strength should be sufficient to deliver year-on-year profit growth even in a scenario of won appreciation, but exchange-rate volatility remains a variable worth monitoring closely.

The financial burden of the VLCC acquisition also merits attention. Pan Ocean's net financial debt is projected to climb from 2.724 trillion won in 2024 to 4.007 trillion won in 2026, with capital expenditure expected to generate a net cash outflow of 1.517 trillion won in 2026 alone. The debt-to-equity ratio is estimated to rise to 97.6%.

Shareholder returns

On a more encouraging note, the improved earnings outlook supports a rising dividend. Hana Securities forecasts that dividends per share will increase from 150 won in 2025 to 210 won in 2026 and 230 won in 2027. A new dividend policy expected to be introduced from 2027 could provide additional upside for shareholders.

Valuation

Pan Ocean's shares closed at 5,770 won on 30 September, implying 56% upside to Hana Securities' target price of 9,000 won. The stock trades at a 2026 price-to-earnings multiple of just 6.24 times — a level the broker characterises as historically cheap. The 52-week range is 3,550 to 6,380 won, and the company's market capitalisation stands at approximately 3.085 trillion won.