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

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 as its ownership percentage exceeded 5% on the 19th, it was required to file a new report.
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 been hovering in the 2,000-won range, it remains more than 30% below its April high.
Market observers believe that Morgan Stanley focused on KoreaLine’s stable profit structure and its appeal as an undervalued stock rather than on short-term share price movements.
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 is considered to have a strong advantage in its ability to generate stable earnings thanks to a high proportion of long-term shipping contracts.
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 marked 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 solely at the second quarter, 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 operates primarily under 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 operates eight LNG-dedicated vessels for KoreaGasCorporation (KOGAS) and has maintained dedicated vessel contracts with the company since 1996. With recent disruptions in the import of Qatari LNG coinciding with plans to increase imports of U.S. LNG, the possibility of additional dedicated vessel contracts is also being discussed.
Choi Min-ki, an analyst at Shinhan Investment Securities, explained, “Participation in long-term dry bulk and LNG contract tenders by 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 attractiveness 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 approximately 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.”