Stock downgraded: STX Pan Ocean target price of 0.67 sgd by CIMB-GK

CIMB-GK Research said it has cut its target price for STX Pan Ocean Co Ltd to 0.67 sgd from 0.74 sgd given lowered expectations for the company's 2006 results. STX Pan Ocean cited a decline in freight rates and higher prices for bunker fuel as major reasons for a 69 pct decline in its first quarter net profit to 25.95 mln usd. Consequently CIMB-GK said it has revised down its 2006 profit estimate for STX Pan Ocean by 5 pct on the assumption of lower freight rates. CIMB-GK said that the company's first quarter profit was 8 pct lower than its estimate and much lower than market consensus. "We believe it will be some time before STX can turn around its charter-in rates to match rate declines on the sales side. With continued opacity in its operations, STX's risk profile remains high, especially in an environment of softening rates," the brokerage said. CIMB-GK maintained its "outperform" call on STX Pan Ocean. At 11.09 am, STX Pan Ocean was down 0.015 sgd or 2.16 pct at 0.680 on volume of 2.21 mln shares.