Uni-Asia Group

Price target: SAC Capital ‘buy’ $1.14

Possible recovery of charter rates

With a possible recovery of charter rates and a spotlight on sustainability, SAC Capital analyst Nicole Lim has maintained her “buy” call on Uni-Asia Group. Lim has a target price of $1.14.

As the Baltic Handysize Index (BHSI) reached US$831 ($1,098) in December 2023, the highest level this year and more than double the trough of US$389 in August 2023, this upward trend has provided support to the index in 2H2023 as global demand recovers, says Lim.

The analyst notes that minor bulk trades, a major user of handysize vessels, is likely to record higher growth in 2024–2025, as the rerouting of trade flows towards longer voyages similar to the Panama Canal restrictions would further act to boost tonnemile vessel demand.

“Notwithstanding, improvements to the macroeconomic backdrop and sector recovery could bolster the index above US$1,000 (about +20% from current levels), driving about 15% upside to shipping top line,” Lim notes.

Uni-Asia’s investment of JPY100 million ($930,200) in Good Kaisha GH Property, a fund established for real estate development and operation of five group homes for persons with disabilities, is in line with the company’s commitment to good corporate citizenship and sustainable business practices, the analyst says.

Lim highlights the group’s Japan’s business, Uni-Asia Capital Japan (UACJ) which led a consortium that won a bid from the government to develop and operate a private finance initiative consisting of fitness facilities and bathhouses which will reuse residual heat from an existing waste treatment plant.

UACJ also started managing JPY1.3 billion solar power property assets in 3Q2023.

A possible net cash inflow is also on the horizon for Uni-Asia, as Lim notes that management is considering the further disposal of older fleet vessels to freshen the portfolio. —