PSL Gains 9% following the Inclusion in SET100 Index and Freight Rate Uptrend

PSL rose 8.78% in the morning session of June 17, 2021, following the company's inclusion in the SET100 in the semi-annual review.

The share price of Precious Shipping Public Company Limited (PSL) rose ฿1.80/share or 8.78% to ฿22.30/share in the morning session of June 17, 2021, with a trading value of 1,186 million baht, following the company’s inclusion in the SET100 in the semi-annual review, while the freight rate (BDI Index) surged by 2.75% to 3,025 points with a 13.4% month-to-date gain.

Asia Plus Securities (ASPS) recommends short-term speculation on shipping plays as it continues to benefit from a rising Baltic Dry Index (BDI), highlighting PSL and TTA as Top Pick.

Meanwhile, KTBST Securities (KTBST) has given a BUY rating on PSL and a target price of 24.00 baht, which is pegged to 2021E PER of 25.0x. KTBST favors PSL because 1) earnings are forecasted to swing to positive territory with a strong recovery in 2021E, and 2) the company should benefit from an uptrend in the Baltic Supramax Index (BSI), which has hit the 10-year high, while revenue from the dry bulk business normally accounts for 99% of total revenue and only 17% of its fleet has signed the long-term fixed-rate contract (more than one year).

KTBST forecast 2021E net profit of 1.57 billion baht, recovering from a net loss of 1.30 billion baht in 2020. The forecast is based on assumptions that 1) total revenue will surge +67% in light of BSI uptrend, and  2) gross profit margin will widen to 39.1%, a similar level to 2010 when BSI hovered around 2,000-3,000 points.

Additionally, on June 16, the Stock Exchange of Thailand (SET) announced the results of the semi-annual index review for SET50, SET100, sSET, SETCLMV, SETHD, SETTHSI and SETWB indices for the period of the second half of 2021 (July 1-December 31, 2021) as follows:

SET100: nine securities consisting of Asia Aviation pcl (AAV), Ichitan Group pcl (ICHI), NR Instant Produce pcl (NRF), Precious Shipping pcl (PSL), Polyplex (Thailand) pcl (PTL), Singer Thailand pcl (SINGER), Sri Trang Gloves (Thailand) pcl (STGT), Synnex (Thailand) pcl (SYNEX) and Taokaenoi Food & Marketing pcl (TKN) will be added as index constituents.

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