Soaring Hanjin Stock Amid Strong Delivery Performance and New Shareholder Appearance...

Kyungbang, Value Reassessment Expected with Stake Expansion... Target Prices Raised Across the Board

Photo by Asia Economy DB

[Asia Economy Reporter Geum Boryeong] As online shopping increased due to the novel coronavirus disease (COVID-19), Hanjin received a strong performance report for the first quarter. Attention is focused on whether the stock price can continue to rise with Kyungbang emerging as a new shareholder.

According to Hanjin on the 20th, the first-quarter results were tentatively compiled with sales of 528.3 billion KRW and operating profit of 24.6 billion KRW. Compared to the same period last year, sales increased by 11.2% and operating profit by 34.4%, exceeding market expectations.

The biggest contributor to the strong performance was the courier business division. As the COVID-19 situation prevented people from going out, online shopping surged, improving the courier business division's operating profit by 81.9% year-on-year to 10 billion KRW. Hanjin's first-quarter courier volume is estimated at 104 million boxes, with an average unit price of 2,237 KRW.

The courier business remains under the influence of COVID-19 in the second quarter as well. The growth rate of courier volume is recording over 20%. If this trend continues, performance improvement due to double-digit volume growth in the courier business is expected to remain valid in the second quarter.

Efforts to improve the financial structure through the sale of non-core assets such as the rental car business are also contributing to performance improvement. Kim Yoo-hyuk, a researcher at Hanwha Investment & Securities, explained, "Hanjin is proceeding with the sale of idle assets worth 210 billion KRW to secure investment funds, and the recent sale of the rental car business has also been reported."

With the emergence of Kyungbang as a new shareholder, a reduction in valuation discount is also expected. On the 8th, Kyungbang disclosed that it holds a 6.4% stake in Hanjin. Although Kyungbang stated that the investment purpose is simple investment, the possibility of additional stake expansion and change of investment purpose in the future cannot be ruled out. Jung Yeonseung, a researcher at NH Investment & Securities, analyzed, "If Kyungbang expands its stake in Hanjin, the possibility of selling core businesses such as courier and port operations increases," adding, "A revaluation of the core business value is necessary, and hidden value creation is also possible in this process." Hanjin's stock price fell to 26,250 KRW intraday on the 27th of last month but soared to 57,200 KRW on the 17th.

Securities firms have unanimously raised Hanjin's target price. Shin Young Securities raised it from 46,000 KRW to 52,000 KRW, Hanwha Investment & Securities from 42,000 KRW to 54,000 KRW, and NH Investment & Securities from 42,000 KRW to 53,000 KRW, respectively.

This content was produced with the assistance of AI translation services.