[Click eStock] HMM, US Port Congestion Until Next Year...

[Asia Economy Reporter Junho Hwang] Ebest Securities downgraded HMM's stock price from 47,000 won to 32,000 won on the 15th. Despite the administrative order due to the logistics crisis in the United States, port logistics congestion continues, so there is potential for stock price increase, but the target price adjustment is due to the conversion of Korea Maritime Promotion Corporation's convertible bonds (CB).

HMM's sales in the third quarter of this year rose 134% year-on-year to 4.0164 trillion won, and operating profit increased 719.6% year-on-year to 2.2708 trillion won. Both sales and operating profit exceeded market expectations. This performance is analyzed as an improvement due to rising freight rates. In terms of costs, there was an increase in fuel costs due to rising oil prices and an increase in labor costs due to wage negotiations, but the impact on operating profit margin was limited. The operating profit margin in the third quarter recorded 56.5%.

Ebest Securities expected that the logistics bottleneck would not be easily resolved. On the 13th of last month, the Joe Biden administration in the United States ordered 24-hour operation of the West Coast container terminal. However, after checking the LB Container Terminal CCTV, Ebest Securities analyzed that although truck movements became more active before and after the 24-hour terminal operation order, the Port congestion index is worsening. Accordingly, the logistics bottleneck is expected to continue until the first half of next year.

However, the target price had to be lowered due to the 100% stock conversion of the CB. Researcher Man-sik Na of Ebest Securities said, "Despite the early redemption request of the 191st convertible bonds of HMM, the Korea Maritime Promotion Corporation exercised the conversion rights," adding, "It is unrealistic to maintain the existing estimates."