Shipping Industry Improvement Leads to 6 Consecutive Trading Days of Gains, Intraday 52-Week High Reached
[Asia Economy Reporter Song Hwajeong] Recently, with expectations of economic recovery improving the shipping industry conditions, HMM has continued its strong performance. It has been breaking its 52-week high record day after day, surpassing even the upper limit of its target stock price.
As of 9:30 AM on the 23rd, HMM was trading at 28,550 KRW, up 2,000 KRW (7.53%) from the previous day. This marks six consecutive trading days of gains. During the session, it rose to 29,600 KRW, breaking its 52-week high once again.
With the recent strong momentum, the upper limit of the target stock price suggested by securities firms has also been surpassed. The target price for HMM set this year ranges from 16,500 KRW to 24,000 KRW.
Foreign investors have driven HMM’s stock price strength. While foreign investors have recently maintained a selling trend in the domestic stock market, they purchased HMM shares worth 86.6 billion KRW over the past week, making it the second most net-bought stock.
The improvement in shipping industry conditions due to global economic recovery expectations is interpreted as the reason for the stock price rise and the inflow of foreign net buying. The Baltic Dry Index (BDI), which serves as a benchmark for bulk carrier freight rates, recorded 2,281 points as of the 19th, up 66.0 points from the previous day. This is a 630-point increase over 20 days since it recorded 1,651 on the 1st of this month, marking the highest level in the past year. Compared to May last year, when the BDI fell to 393 due to the impact of COVID-19, it has risen more than fivefold in just 10 months. The recovery in cargo volumes such as iron ore and coal due to economic recovery in China and major countries, along with increased transportation demand during the grain harvest season, has driven freight rates upward.
On the previous day, HMM’s first 16,000 TEU-class ultra-large container ship, ‘HMM Nuriho,’ departed for its maiden voyage carrying domestic cargo. Nuriho is a vessel built as part of the government’s five-year shipping reconstruction plan and is the first delivered container ship among eight 16,000 TEU-class vessels contracted with Hyundai Heavy Industries in September 2018. HMM plans to deploy two vessels, Nuriho and Gaonho, early this month to support domestic cargo transportation.
However, since expectations for earnings improvement are already reflected in the stock price, a cautious approach is necessary. Eom Kyunga, a researcher at Shin Young Securities, said, “Expectations for earnings improvement are largely reflected in HMM’s stock price,” adding, “It is more important to focus on the limits of profit and loss that can increase due to transportation revenue rather than on earnings that are expected to surprise.”
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