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Shipping stocks surge on high freight rates

Shares of shipping companies jumped strongly on Thursday after freight rates hit a 10-year high, led by Precious Shipping (PSL) soaring 10.83 per cent to 17.40 baht per share at the mid-day break.

Precious Shipping peaked at 17.70 baht at 12.21 pm, up 12.74 per cent from its closing price on Wednesday. Transaction value in the morning session was 1.16 billion baht.

The Baltic Dry Index (BDI) climbed 9.6 per cent to close at 2,710 points on Wednesday, the highest since October 2010, gaining for a sixth straight session as shipping demand and supply continued to mismatch, according to UOB Kayhian Securities.

Thoresen Thai Agencies (TTA) and Regional Container Lines (RCL) also bounced 7.69 per cent to 15.40 baht and 5.04 per cent to 31.25 baht, respectively. TTA’s transaction value accounted for 666.7 million baht and RCL for 766.5 million baht.

Shipping firms have seen a sharp rise in their price from Friday’s trading when the BDI began to climb up to a record high. PSL closed the session by surging 14.88 per cent on Friday.

An analyst at Krungsri Securities predicted that PSL and TTA will report a turnaround in their earnings this year at 945 million baht and 926 million baht, respectively.

However, the persistent upswing in shipping stocks has put an alert to the market whether they were overvalued as the price of PSL, TTA, and RCL have increased more than 100 per cent year-to-date.

The PSL’s target price from Krungsri Securities is 12.00 baht, while that of TTA is 11.20 baht.
Source: Thai Enquirer

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