[Edaily Reporter Park Jung-Soo ] Global investment bank Morgan Stanley has become a major shareholder of KoreaLine(005880). The move is seen as an investment driven by the company’s stable earnings based on long-term shipping contracts and improved financial structure, as well as its growth potential stemming from additional orders for liquefied natural gas (LNG) carriers.

According to the Financial Supervisory Service’s electronic disclosure system on the 26th, Morgan Stanley & C&C INTERNATIONAL PLC disclosed that it holds 16,415,412 shares (5.08%) of KoreaLine. The purpose of the holding is for general investment.
As of the 18th, Morgan Stanley held 15,964,165 shares of KoreaLine. It subsequently increased its stake through on-market purchases and sales, and on the 19th, its ownership stake exceeded 5%, triggering a new reporting requirement.
Since the beginning of the year, shipping stocks have shown a collective upward trend amid expectations of rising freight rates due to ongoing tensions surrounding the Strait of Hormuz. KoreaLine’s stock price also rose from the 1,700 won range at the start of the year to surpass the 3,000 won mark in April, setting a new 52-week high. Subsequently, as upward momentum weakened, the stock price fell back to the 1,700 won range. Although the stock has recently stabilized in the 2,000-won range, it remains more than 30% below its April high.
Market observers believe Morgan Stanley focused on KoreaLine’s stable profit structure and its appeal as an undervalued stock rather than its short-term share price.
KoreaLine is a shipping company that transports raw materials such as iron ore, natural gas, and crude oil. Unlike general shipping companies, whose earnings are highly volatile due to spot freight rates, KoreaLine’s strength lies in its high proportion of long-term shipping contracts, which enable it to generate stable earnings.
More than 70% of KoreaLine’s revenue comes from long-term shipping contracts with companies such as POSCO and KoreaGasCorporation. Including its subsidiaries, the company operates a fleet of 56 vessels, consisting of 38 dry bulk carriers, 14 LNG carriers, and 3 tankers.
Recently, its profitability has also shown notable improvement. In the first half of this year, revenue totaled 590.6 billion won, an 11% decrease compared to the same period last year, but operating profit rose 42% to 137.4 billion won. Looking at the second quarter alone, revenue fell 6% to 312.8 billion won, while operating profit surged 90% to 62.9 billion won.
Its financial structure is also improving. KoreaLine used the proceeds from last year’s sale of VLCCs and bulk carriers to reduce debt, lowering its debt-to-equity ratio to 64% by the end of the second quarter of this year. The company also holds approximately 300 billion won in cash and cash equivalents.
The securities industry is focusing on the potential for additional LNG carrier orders, in addition to the company’s stable existing business.
Ahn Do-hyun, an analyst at Hana Securities, stated, “Since KoreaLine relies primarily on long-term contracts, its earnings are highly stable, and cash flow is expected to remain steady,” forecasting this year’s revenue at 1.311 trillion won and operating profit at 258.5 billion won—representing year-over-year increases of 3% and 25%, respectively.
In particular, KoreaLine owns eight LNG carriers dedicated to KoreaGasCorporation (KOGAS) and has maintained these dedicated charter contracts since 1996. With recent disruptions in LNG imports from Qatar coinciding with plans to increase imports of U.S. LNG, the possibility of additional dedicated charter contracts is also being discussed.
Choi Min-ki, an analyst at Shinhan Investment Securities, explained, “Participation in long-term dry bulk and LNG contract bids from major domestic shippers in the second half of the year will lay the groundwork for revenue growth,” adding, “Although fuel cost volatility remains due to prolonged geopolitical risks in the Middle East, the impact on profits is minimal given the structure of the contracts.”
The company’s appeal as an undervalued stock is also coming to the fore. According to Shinhan Investment Securities, KoreaLine’s 12-month forward price-to-book ratio (PBR) stands at around 0.3x.
Analyst Choi noted, “Amid the bulk shipping boom, the valuation gap with global peers has widened significantly, even when accounting for the low return on equity (ROE),” and assessed that “the upcoming disclosure system for companies with low PBRs, set to take effect this November, could serve as a catalyst for revaluation.”