Credit Suisse cuts STX Pan Ocean to $6.90

Stock Name: STXPO 100
Company Name: STX PAN OCEAN CO., LTD.

Research House: Credit Suisse

Price Call: HOLD

Target Price: 6.90

Credit Suisse has cut its target price for Singapore-listed South Korean shipping firm STX Pan Ocean (STXPx.SI) to $6.90 from $12.35 and kept its neutral rating.

“Faced with a weaker global economic outlook, coupled with severe oversupply, we expect STX Pan Ocean to be loss-making in 2011-2012 on low freight rates,” said Credit Suisse in a report.

The brokerage expects the firm to turn in a loss of US$41.8 million ($50.8 million) for 2011 and with a planned capital expenditure of US$2.3 billion in the next two years, STX Pan Ocean’s balance sheet will deteriorate.

The company is also likely to face rising financing costs, in light of the growing financial turmoil in the markets and tighter bank financing, Credit Suisse said.

At 9:50 a.m., shares of STX Pan Ocean were 1.7% higher at $8.00, The shares have fallen 39% since the start of the year.