HMM has returned to the 1 trillion won quarterly operating profit club after seven quarters, benefiting from increased cargo volume and rising sea freight rates. However, concerns are rising that finding a suitable buyer might not be easy due to its expanded size and the various risks associated with the acquisition.
On Nov. 13, HMM announced its third-quarter revenue of 3.552 trillion won, operating profit of 1.4614 trillion won, and net profit of 1.7385 trillion won. Consequently, the cumulative revenue for this year has reached 8.5453 trillion won, operating profit 2.5127 trillion won, and net profit 2.8843 trillion won.
This strong performance is attributed to the high sea freight rates maintained due to heightened geopolitical risks, such as the Red Sea crisis that began late last year. The Shanghai Containerized Freight Index (SCFI), which averaged 986 points in the third quarter of last year, rose to an average of 3082 points in the third quarter of this year. Generally, the shipping industry considers 1000 points on the SCFI as the breakeven point for shipping companies.
Additionally, new services such as the Asia-Mexico route, the deployment of ultra-large container ships with a capacity of 13,000 TEU, and an increase in high-yield cargo have strengthened profitability-focused operations, leading to increased revenue and operating profit. The continuous deployment of eco-friendly ships is also seen as a factor in improving the company’s structure.
Regarding the container segment, HMM expects the overall market to weaken as it enters the traditional off-season in the fourth quarter. However, it anticipates continued supply instability due to the impact of strikes at U.S. East Coast ports and schedule delays. HMM plans to establish an optimal transportation service network in line with changes in supply and demand by region and route through new cooperation with ‘Premier Alliance + MSC’ starting in February next year. Additionally, as part of its mid- to long-term plan for 2030, HMM announced its focus on business diversification and generating new revenue streams.
In the bulk segment, despite entering the seasonal peak of winter in the fourth quarter, HMM is paying attention to economic uncertainties, such as the potential recovery of the Chinese economy. To maximize profitability, HMM plans to extend long-term cargo contracts and secure new contracts through customer and cargo development.
However, finding a new owner for HMM is expected to be challenging due to its expanded size. As of the first half of this year, HMM’s asset size is approximately 15 trillion won, with substantial cash assets.
The high value of shares held by HMM’s largest shareholders, the Korea Development Bank (KDB) and the Korea Ocean Business Corporation, is also seen as a limitation. According to the Financial Supervisory Service, the combined shareholding ratio of HMM’s creditors, KDB (33.73%) and the Korea Ocean Business Corporation (33.32%), is 67.05%.
If the remaining perpetual bonds are converted next year, the combined shareholding ratio of KDB (36.02%) and the Korea Ocean Business Corporation (35.67%) will reach 71.69%. The market estimates the value of the government’s stake in HMM to be in the 10 trillion won range.
Source: BusinessKorea