[Click eStock] HMM Meets Market Expectations and Announces Shareholder Return Policy

[Asia Economy Reporter Kwon Jaehee] Daishin Securities has given HMM a buy rating and set a target price of 36,000 KRW.

HMM's sales in the fourth quarter of last year amounted to 3.7589 trillion KRW, and operating profit was 2.6985 trillion KRW. This is a strong performance exceeding market expectations.

By business segment, container sales reached 4.1882 trillion KRW, with operating profit of 2.6756 trillion KRW, representing increases of 130.5% and 394.7% respectively compared to the same period last year. Bulk sales were 210.8 billion KRW, with operating profit of 27.3 billion KRW, up 75.4% and 55.3% respectively over the same period. Other segments recorded sales of 44 billion KRW, down 36.7% year-on-year. Operating loss turned to 4.5 billion KRW in the red.

The background to HMM's performance is that operating revenue per container box significantly exceeded estimates, while container transport volume was weaker than expected. This is attributed to disruptions in inland transportation in the U.S. and port congestion, leading shipping companies to reduce the number of scheduled voyages.

In the fourth quarter of last year, average container revenue was $4,070.5/TEU, up 167.3% year-on-year. Transport volume was 870.5 thousand TEU, down 18.4% over the same period. Operating revenue per container box greatly exceeded our estimates, but container transport volume was weaker than expected.

Yang Ji-hwan, a researcher at Daishin Securities, analyzed, "Although the logistics bottleneck in 2022 is expected to ease compared to 2021, a complete resolution is unlikely, so the possibility of a sharp adjustment in the container market is considered low."

HMM's performance this year is forecasted to record sales of 160 trillion KRW and operating profit of 85 trillion KRW, representing increases of 16.3% and 15.3% respectively compared to the previous year. Net profit is expected to rise 55.7% to 83 trillion KRW over the same period.

Researcher Yang said, "With the elimination of accumulated losses in 2021, a shareholder return policy announcement is expected," adding, "Even with a dividend payout ratio of just 10%, the dividend yield for 2023 could be about 7% based on the current stock price."

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