[Click eStock] "HMM, Entering Container Market Downcycle Next Year... Target Price Down"

[Asia Economy Reporter Song Hwajeong] Daishin Securities on the 28th forecasted that HMM will achieve record-high profits in the fourth quarter of this year, but sees the possibility of the container market entering a downcycle in the second half of next year, leading to a downward revision of the target stock price from 48,000 KRW to 36,000 KRW. The investment rating was maintained as 'Buy.'

Yang Jihwan, a researcher at Daishin Securities, explained, "We expect a robust market and profit flow due to continued logistics bottlenecks until the first half of next year, but from the second half, the easing of bottlenecks and an increase in new ships scheduled for delivery in 2023-2024 make it highly likely that the industry will enter a downcycle, so we lowered the applied multiple."

The possibility of further stock price adjustments is expected to be low. Researcher Yang said, "HMM's stock price has reflected the possibility of a market peak-out since the end of the first half of 2021, so the chance of additional adjustments is small," adding, "Until the sale issue intensifies in the first half of next year, it is highly likely that the stock will show a limited upside potential and trade within a box range."

Record-high profits are expected in the fourth quarter of this year. Daishin Securities estimated HMM's operating profit for the fourth quarter at 2.5713 trillion KRW, exceeding the market consensus by 18%. This would be the largest quarterly performance since the company's founding. Researcher Yang analyzed, "The average Shanghai Containerized Freight Index (SCFI) for the fourth quarter, as of the 24th, rose 140.8% year-on-year to 4,664.3 points, setting a historic high," and added, "Despite U.S. President Joe Biden's measures to ease logistics bottlenecks, container freight rates remain robust even in the off-season due to continued port congestion."

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