[Click e-Stock] "HMM, Structural Profit Improvement for Container Shipping Companies"

On July 21, Hana Securities raised its target price for HMM from 20,000 won to 24,000 won, stating that the fundamental added value of maritime transport is increasing as uncertainty in maritime logistics intensifies. The investment opinion was maintained as 'Buy'.

HMM's sales for the second quarter are estimated at 2.687 trillion won (up 1% year-on-year), with operating profit at 466 billion won (down 28%). Do-Hyun Ahn, a researcher at Hana Securities, said, "It is difficult to predict performance as there have been many changes in both shipping capacity supply and freight rates during this period, but overall, shipping volume is expected to decrease while freight rates are likely to remain strong."

With the recent amendment to the Commercial Act, pressure to enhance shareholder returns for listed domestic companies has increased, drawing market attention to HMM, which holds a large amount of cash-equivalent assets. As of the end of the first quarter, HMM's cash-equivalent assets stood at 3.1 trillion won, and liquid financial assets at 12.6 trillion won.

Ahn explained, "Although there is a lot of cash, there are also many uses for it. First, the company plans to repurchase and cancel treasury shares worth 2 trillion won within this year, and is also proceeding with the acquisition of SK Shipping's vessels." He further diagnosed that, as global container shipping companies continue placing large-scale new orders, HMM will also need to place large-scale new orders soon in order to achieve its long-term goal of a container fleet capacity of 1.55 million TEU (1 TEU equals one 20-foot container) by 2030.

Ahn added, "HMM plans to spend 11 trillion won on expanding its container fleet by 2030. Considering the rise in new ship prices, it is likely that the company will take a conservative approach to shareholder returns, except for the special shareholder return implemented in 2025." He also projected, "If HMM resumes fleet investment, its return on equity (ROE) will gradually improve." The fact that the company is free from U.S. sanctions on Chinese ships and shipping companies is also a positive factor for its stock price.

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