Dry bulk shipping remains stable. 46 out of 52 self-owned vessels of the Company are dry bulk vessels. We expect dry bulk shipping will remain the main business and account for approximately 90% of revenue of the Company in FY14.
Baltic Dry Index (BDI) closed at 906 points by the end of last week, decreased by 57.1% from the beginning of the year. Baltic Dry Index (BDI) averaged at 1,293 points for the first five months of this year, increased by 58.4% compared to the same period in 2013, but down 20.2% if compared to 2H13. We expect the BDI to grow mildly for in 2H14.
Revise down our earnings estimates. We maintain our FY14-FY16 revenue estimates of US$229 million, US$315 million and US$376 million, respectively. Our revised FY14-FY16 earnings are expected to be US$17.3 million, US$42.5 million and US$60.2 million, respectively. The corresponding FY14-FY16 EPS are expected to be US$0.004, US$0.011 and US$0.015, respectively.
Maintain rating of ‘Neutral’ but revise down TP to HK$2.45. We believe the sentiment of global dry bulk market is turning positive, but the oversupply of dry bulk carriers is likely to continue and the recovery of charter rate will be slow in the short term. Maintain ‘Neutral’, revise down TP to HK$2.45 based on the peers’ valuation, representing 72.7x, 29.6x and 20.9x FY14-FY16 PER and 0.6x FY14 PBR.