DAISHIN SECURITIES analyzed that purchasing HMM at the current stock price on the 20th could likely lead to losses after participating in the public offering, noting that the profitability of buying is low. There are also projections that the benefits for general investors would be minimal if the Korea Development Bank and Korea Maritime Promotion Corporation participate 100%.
Yang Ji-hwan, a researcher at DAISHIN SECURITIES, pointed out regarding HMM's self-tender offer that "buying HMM at the current stock price carries a high possibility of negative revenue, so investors should not be misled by the tender offer price."
Although the tender offer price is 26,200 won, which is 14.16% higher than the current stock price, it is expected that the competition ratio will be high since tendered stocks account for 7.98% of the total issued stocks, leading to the judgment that expected revenue will not be high.
Yang listed three variables that determine revenue: ▲ stock price after the tender offer ends, ▲ participation ratio in the tender offer, and ▲ purchase price.
He explained, "Even if the largest shareholder and related parties holding 71.7% of the equity do not participate in the tender offer, the stock price must be maintained above 22,000 won after the tender offer for investors who bought at 23,000 won not to incur losses. However, the likelihood that the largest shareholder and related parties will not respond to the tender offer is extremely low."
The biggest factor determining revenue is the stock price after the tender offer. If an investor buys HMM shares at 23,000 won and the stock price maintains 23,000 won after the tender offer, they can expect a revenue of 1.1% to 3.9% (excluding transaction costs and taxes).
However, it is estimated that if the stock price falls to 22,000 won after the tender offer, the revenue will record a negative. Even if the participation ratio is just 28%, the revenue would only amount to 0.8%. If the stock price drops to 21,000 won, losses become inevitable in all cases, according to Yang's judgment.
Yang noted, "While I agree with the intention of enhancing shareholder value through shareholder returns, ultimately, the largest beneficiaries will be the major shareholders," adding, "If they do not participate in the tender offer, their equity stake will increase, making future privatization efforts difficult, so the Korea Development Bank and Korea Maritime Promotion Corporation are likely to participate in the tender offer."