iM Securities noted on the 14th that it would lower its target stock price for HMM due to continuing uncertainty in international container market conditions. However, with a plan for a 2 trillion won stock buyback and cancellation, it is important to pay attention to the future schedule and method. The target stock price is reduced from the previous 31,000 won to 29,000 won, while maintaining an investment opinion of 'buy.'
HMM's consolidated sales for the second quarter reached 2.6 trillion won, and operating profit was recorded at 233.2 billion won. These figures reflect decreases of 1.5% and 63.8%, respectively, compared to the same period last year. In particular, the operating profit fell short of market expectations (consensus) by 40%. The reasons for the poor second quarter performance are thought to include the partial non-reflection of the effect of freight rate rebounds and increases in expenses such as cargo handling charges.
Market conditions for shipping containers after the second quarter also appear uncertain. The Shanghai Container Freight Index (SCFI) has decreased by 55% year-on-year to 1,490 points and has fallen for nine consecutive weeks since June. Additionally, with the United States announcing an extension of the high tariff exemption deadline for China, uncertainty regarding the container market for shipments to the Americas is increasing. However, the demand for cargo volume on routes excluding the Americas has not significantly slowed down, suggesting that cargo volumes on European routes are likely to remain robust.
HMM's future stock price outlook is expected to be determined by the schedule and method of its stock buyback. HMM has previously stated that it plans to conduct a stock buyback and cancellation amounting to about 2 trillion won within this year. Assuming a stock buyback based on recent stock prices, the possible purchase volume is about 87.42 million shares.
Bae Se-ho, a researcher at iM Securities, analyzed, "If the public purchase proceeds with proportional allocation to shareholders, the number of stocks excluding those of the Industrial Bank of Korea and the Korea Ocean Business Corporation (KOBC) is expected to decrease from the existing 290 million shares to 265 million shares," and added, "If the participation volume of the industrial bank and the KOBC is less than their equity ratio, the market's circulating volume could be even smaller."