[Click eStock] "HMM Initiates Gradual Divestment"

KDB Industrial Bank Stake Expected to Be Sold First
Daishin Securities "HMM, Target Price Maintained at 48,000 Won"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Lee Dong-geol, Chairman of KDB Industrial Bank (KDB), expressed the opinion that a phased market sale of HMM is desirable. It is expected that the plan will prioritize the sale of KDB's shares first, followed by granting a call option to acquire the shares held by the Korea Ocean Business Corporation (KOBC) subsequently.

According to Daishin Securities on the 3rd, at a press conference with KDB reporters on the 30th of last month, Chairman Lee said, "I heard that if all convertible bonds held by KDB are converted, the combined shares held by KOBC and KDB exceed 70%," adding, "It is impossible to privatize with 70%, so it is desirable to offer only the controlling shareholder's shares to facilitate the sale and gradually sell them in the market."

It is highly likely that a phased sale plan will be concretized and promoted by the first quarter of next year. Additionally, the possibility of exercising rights on the 192nd to 197th series of perpetual convertible bonds and bonds with warrants is interpreted to have significantly decreased.

However, Daishin Securities analyzes that the plan to gradually sell shares in the market is realistically unlikely. Yang Ji-hwan, a researcher at Daishin Securities, explained, "Block trades outside regular hours are likely to fail while there are still shares planned for sale," and "It is difficult to find buyers because there is no incentive for large-scale share acquisition without securing management rights."

Furthermore, Chairman Lee's statement about offering only the controlling shareholder's shares and gradually selling them in the market can be interpreted to mean that they are considering a plan to gradually sell about 40% of shares currently held by KDB and KOBC.

It is expected that the phased sale of HMM shares will prioritize the sale of KDB's shares. Additionally, Daishin Securities analyzes that granting a call option to subsequently acquire KOBC's shares is highly likely. They also judged that the perpetual bonds are likely to be repaid gradually.

The sale is expected to be well-received. Researcher Yang said, "At the end of Q3 this year, HMM's cash and liquidity were about 4.3 trillion KRW, and it is estimated to exceed 6 trillion KRW by the end of the year," adding, "This corresponds to about 5.2 trillion KRW when converted at the current stock price."

Accordingly, Daishin Securities maintained its investment opinion of 'Buy' on HMM with a target price of 48,000 KRW. The closing price on the previous day was 26,400 KRW.

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