Shares
in the Hong Kong-listed owner are up in excess of 30% in the period amid
expectations of a new phase of expansion.
Citi
analyst Rigan Wong is now urging investors to cash in as the “optimism has been
overdone”.
“Street and investors
may have overlooked the earnings downside risks in 2H12-1H13 due to low freight
rates arising from over-supply,” the analyst said.
Pac
Basin’s recent $124m fundraiser and the sale of its troublesome ro-ro fleet
have perked investor interest in the owner, Wong says.
“However, we caution
that any ship acquisitions may become accretive only in the mid- to long-term
given the poor market conditions near term. Instead, investor attention may
turn to disappointing 2H12-1H13 earnings, coupled with significant consensus
earnings downgrades,” he said.
The analyst believes Pac
Basin will break even when its full-year results are announced in February.
“Dry bulk 1H13 earnings
may be disappointing because 1H13 revenue days may be loss-making given
unattractive freight rates currently being secured,” Wong said.
“In contrast, we expect
the Towage division to be profitable throughout 2012 and 2013, benefiting from
a strong project pipeline especially Australian towage activity.
“However, profit from
this division is too small to offset dry bulk shipping losses in FY13E.”
