Shipping Industry Freight Rates Remain Strong... HMM and Pan Ocean Among Target Price Upgrades

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] The securities industry’s expectations for the shipping and transportation sector are rising. The strong freight rates that have continued since last year are expected to persist this year, sustaining a solid trend of improved performance.

According to the Korea Exchange on the 18th, based on the closing prices from the previous day compared to the end of last month, HMM’s stock price rose by 15.75%, and Pan Ocean’s by 12.75%. The upward trend in these sectors’ stock prices appears to reflect optimism about the favorable shipping market conditions this year.

Shipping companies have already shown strong performance since last year. Container shipping company HMM achieved consolidated sales of 6.413 trillion KRW and an operating profit of 980.8 billion KRW last year. Sales increased by 16.3% compared to the previous year, and operating profit turned positive, recording the largest profit in history.

The securities industry expects the SCFI to maintain a solid level this year as well. Although cargo volume will continue to increase, the supply situation remains tight, making it inevitable for freight rates to stay strong. The rise in freight rates leads to further performance improvements. According to FnGuide, HMM’s sales this year are projected to reach 7.7374 trillion KRW, with an operating profit of 1.6009 trillion KRW. These figures represent increases of 20.7% and 63.2%, respectively, compared to the previous year.

The performance outlook for bulk carriers is also positive. Pan Ocean’s sales this year are expected to increase by 9% to 2.7244 trillion KRW, with operating profit rising by 11.4% to 250.1 billion KRW.

Along with the continued growth in shipping companies’ performance, securities firms are also raising their target stock prices. Samsung Securities raised its target price for HMM by 26%, from 17,500 KRW to 22,000 KRW, on the previous day. Since HMM’s earnings announcement on the 9th, several other securities firms have significantly revised their target prices upward in recent weeks. Daishin Securities initially set a target price of 18,500 KRW on the 8th but raised it by 29.7% to 24,000 KRW on the 10th.

For Pan Ocean, Eugene Investment & Securities set a fair price at 6,000 KRW, up 11%, Daishin Securities raised it by 20% to 6,600 KRW, and Mirae Asset Daewoo proposed a target price of 6,000 KRW, up 18%.

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