[Edaily Reporter kyoungeun kim ] NH INVESTMENT & SECURITIES announced on the 2nd that it is maintaining its “Hold” rating and target price of 22,000 won for HMM(011200), as the company’s third-quarter operating profit is expected to exceed market expectations by more than 40%. The firm believes that since the recent surge in freight rates is a temporary effect driven by supply disruptions rather than increased demand, there are limits to the sustainability of profits; therefore, strengthening shareholder return policies is necessary for a revaluation of the company’s valuation.
Jeong Yeon-seung, an analyst at NH INVESTMENT & SECURITIES, stated in a report released that day, “As of September 25, the Shanghai Containerized Freight Index (SCFI) stood at 3,686 points, up 155.2% year-over-year, reflecting a stronger-than-expected market.” He added, “However, we believe the recent surge in freight rates is driven more by a real decline in supply than by an increase in global cargo volume. “In the short term, shipping companies’ bargaining power over freight rates has increased, but uncertainty remains regarding its sustainability,” he explained.
It continued, “Reflecting the perception that the current strong performance is not sustainable, the stock market reaction was limited despite earnings estimates being significantly revised upward due to rising freight rates,” and “Considering the company’s low dividend payout ratio compared to global carriers and the absence of a share buyback and cancellation policy, we applied a 10% discount to the average price-to-book ratio (PBR) of 0.83 for global container carriers, resulting in a fair PBR of 0.75,” he stated.
The causes of the actual decline in supply were cited as congestion at alternative ports outside the Strait of Hormuz due to the U.S.-Iran conflict, worsening congestion at Chinese ports caused by typhoons, and a decrease in traffic through the Panama Canal. From September 16 to 22, the vessel waiting time at the Port of Shanghai was 4.72 days, more than double the normal level in February (1.85 days).
NH INVESTMENT & SECURITIES projected that HMM’s third-quarter consolidated revenue would reach 4.065 trillion won, a 50.2% increase year-over-year, while operating profit would rise 216.5% to 939.5 billion won. The operating profit margin is expected to be 23.1%, exceeding the market consensus for operating profit (663 billion won) by 42%. The firm expects strong spot rates for container and tanker shipping to drive profit growth, despite the decline in the won-dollar exchange rate.
However, as the container sector enters its off-season, fourth-quarter operating profit is expected to decline to 544 billion won, and profit momentum is projected to gradually weaken after peaking in the third quarter.
Starting in August, global shipping companies such as Maersk (26 vessels), COSCO (12 vessels), and Yang Ming (6 vessels) resumed placing orders for new ultra-large container ships. These vessels are scheduled for delivery in 2029–2030, leading analysts to conclude that downward pressure on freight rates could persist for an extended period.
Researcher Jeong stated, “Immediate shareholder returns, such as quarterly dividends and share buybacks and cancellations, are required,” adding, “There is room for a revaluation if related policies are strengthened or a divestiture process is initiated.”