[Click eStock] HMM, Operating Profit Expected to Increase Due to Freight Rate Hike... Target Price Upward Revision

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[Asia Economy Reporter Hwang Yoon-joo] Daishin Securities maintained a 'Buy' rating on HMM on the 23rd, expecting an increase in operating profit (OP) due to freight rate hikes, and raised the target price to 42,000 KRW.

Yang Ji-hwan, a researcher at Daishin Securities, stated, "Reflecting the increase in fixed freight contracts (Service Contract) throughout 2022, we raise the estimated annual operating profit for 2022 from the previous 8.5 trillion KRW to approximately 10.7 trillion KRW, a 25.6% increase."

Currently, HMM is negotiating service contracts for the trans-Pacific and Europe routes for 2022. Researcher Yang expects freight rates on the U.S. route (West Coast basis) to increase by about 100% compared to 2021, and the Europe route to rise by 350-400%.

He added, "The SC (1-year fixed freight contract) to be applied from May 2022 is estimated to be about 36% lower than the Spot SCFI as of March 18, 2022, for Europe, and about 25% lower for the U.S."

Researcher Yang projects HMM's 2022 expected performance as sales of 18.5 trillion KRW (+34.1% yoy), operating profit of 10.7 trillion KRW (+44.8% yoy), and net income attributable to controlling shareholders of 10.5 trillion KRW.

Yang recommended, "The easing of congestion at U.S. West Coast ports is expected to be limited in reducing the Spot (non-regular short-term transport contract) SCFI (Shanghai Containerized Freight Index) after mid-April, due to vessel movements to East Coast and other ports and delayed recovery of factory operating rates in China after the Lunar New Year," and advised to "increase holdings during the stock price correction phase."

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