HMM Doubles in One Month Amid Shipping Boom

[Asia Economy Reporter Koh Hyung-kwang] As international maritime freight rates hit record highs, the stock price of HMM, the only domestic national deep-sea shipping company, is also soaring. The increase rate has reached 100% in the past month.

According to the Korea Exchange on the 12th, HMM was traded at 14,600 won on the KOSPI market as of 9:50 a.m., up 12.3% from the previous trading day. It has risen continuously for 9 trading days this month. The increase rate is 62.7%. Compared to the stock price a month ago (7,340 won), it rose 98.9%, and compared to the annual low on March 23 (2,120 won), it surged 588%.

The surge in maritime freight rates to an all-time high pushed the stock price up. The Shanghai Containerized Freight Index (SCFI), announced once a week, recorded 1,664.56 as of the 6th. It rose 134.57 points from the previous week, marking the highest level since the index began in October 2009. The freight index increase rate in the past month reached 90%. Freight rates have suddenly soared as cargo volume, which had sharply declined due to the COVID-19 pandemic, has simultaneously increased.

Among these, the sharp rise in maritime freight rates for the U.S. and Europe, mainly used by domestic export companies, stands out. The freight rate on the U.S. West Coast route, HMM's main route, is $3,871 per 1 FEU (one 40-foot container), maintaining the $3,800 level since September. This is about three times higher than the same period last year.

As the freight rate rise continues, the speed of performance improvement is also accelerating. In the second quarter of last year, HMM recorded an operating loss of 113 billion won, but in the second quarter of this year, it achieved an operating profit of 138.7 billion won, marking a turnaround to profit for the first time in 5 years and 3 months. The debt ratio also significantly decreased from 653.4% in the second quarter of last year to 387.9% in the second quarter of this year. Choi Jin-myung, a researcher at NH Securities, explained, "As international trade is expected to become more active, the order environment for shipping companies is improving."

The performance outlook for the second half of the year is also positive. The securities industry estimates HMM's operating profit for the third quarter at 360 billion won and the annual operating profit at around 840 billion won. Next year, it is expected to record the highest-ever performance with sales of 6.6 trillion won and operating profit of 1.15 trillion won. Yang Ji-hwan, a researcher at Daishin Securities, said, "This year's container ship market is starting a rapid turnaround from the third quarter due to supply reduction and increased cargo volume," adding, "HMM, which posted a surprise performance in the second quarter, will enter a full recovery phase from the third quarter."

Daishin Securities issued its first report on HMM on the 1st and set a target stock price of 13,000 won, but raised the target price to 17,000 won in just 10 days. Domestic pension funds have been continuously buying HMM stocks every day except one day in the past month. The net purchase amount during this period reached 104.6 billion won.

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