[Click eStock] "HMM Q1 Earnings Expected to Decline... Target Price Down"

As the HMM acquisition battle officially begins, the HMM headquarters located in Park One Tower, Yeouido. Photo by Jo Yongjun jun21@

Daishin Securities estimated on the 25th that HMM's first-quarter earnings would fall short of expectations. Accordingly, it maintained its investment rating of 'Market Perform' and lowered the target price to 17,000 KRW.

Yang Ji-hwan, a researcher at Daishin Securities, stated, "We expect first-quarter sales to increase by 22.8% year-on-year to 2.5566 trillion KRW, and operating profit to surge by 85.4% to 569.1 billion KRW," adding, "However, this is expected to fall short of market expectations."

Researcher Yang explained, "It is estimated that about 20-25% of HMM's European volume and about 50-55% of its American volume are subject to contracted freight rates, so they did not fully benefit from the rise in spot freight rates," and added, "The detour around the Cape of Good Hope due to the inability to pass through the Suez Canal increased sailing days per voyage by 20-28 days, which also contributed to higher costs."

Meanwhile, the Shanghai Containerized Freight Index (SCFI) for the first quarter recorded 2021 points, a sharp increase of 107.7% compared to last year. The first-quarter SCFI European freight rate rose significantly by 170% to 2,516/TEU, and the SCFI USWC (U.S. West Coast) increased sharply by 225.2% to 4,149/FEU.