"HMM Expected to Continue Benefiting from Geopolitical Situation in the Middle East" [Click e-Stock]

Daishin Securities Upgrades HMM to Buy
Raises Target Price from 23,000 Won to 29,000 Won

On August 26, Daishin Securities upgraded its investment rating for HMM from Neutral to Buy and raised the target price from 23,000 won to 29,000 won.

Jiny Lee, a researcher at Daishin Securities, stated, "The rationale for the higher multiple is the benefit to freight rates due to the prolonged geopolitical bottlenecks," explaining the decision.

According to Lee, HMM's revenue for the second quarter of this year was 3.402 trillion won, with an operating profit of 354.1 billion won. The increase in freight volume led to higher port charges, and rising oil prices, reflected in fuel costs with a two-month lag, further increased expenses, resulting in an operating profit that fell somewhat short of market expectations. However, Lee predicts that, considering the roll-over of freight rates into the third quarter as well as peak season demand on North American routes, improvement compared to the second quarter is highly likely.

He also noted that the bottleneck situation is unlikely to be resolved easily after September. Lee commented, "Since last year, the container shipping business has faced oversupply due to increased delivery of new vessels, which led to discounts despite rising freight rates," but added, "Persistent supply bottlenecks caused by the Middle East crisis are unlikely to be resolved easily within this year, so container shipping companies are expected to continue to benefit."

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