KB Securities said on the 14th that although HMM's operating profit for the third quarter this year beat market expectations, the decline in container ship freight rates will continue next year and weigh on earnings.
It kept its investment opinion at the previous "Hold" and set the target price at 21,000 won, down 4.5% from before. As of the prior trading day, HMM's closing price was 20,000 won.
HMM posted revenue of 2.7064 trillion won and operating profit of 296.8 billion won in the third quarter this year. Revenue fell 23.8% from a year earlier, and operating profit plunged 80% from a year earlier.
Kang Sung-jin, a KB Securities researcher, said, "Third-quarter operating profit exceeded the market expectation by 7.1%," but added, "It is not enough to reverse investors' concerns about an oversupply of container ships."
Kang said, "The year-over-year decline in operating profit was due to lower container ship freight rates compared with a year earlier amid oversupply," adding, "Of the $860 million decrease in total operating profit, the portion explained by freight rate declines is $780 million."
He added, "Container ship freight rates are expected to continue falling next year," and "The decline in operating profit due to non-freight factors will continue in the fourth quarter."