Daishin Securities on the 21st raised HMM's target stock price by 15% to 23,000 KRW.
HMM's second-quarter operating profit is expected to reach 789 billion KRW, significantly surpassing the market consensus of 553 billion KRW.
The surprise performance is attributed to a sharp increase in spot freight rates on the North America and Europe routes in the second quarter.
The Shanghai Containerized Freight Index (SCFI) for the second quarter stood at approximately 2,390 points, the West Coast of North America freight rate was 4,968 USD/FEU, and the Europe freight rate was 3,084 USD/TEU.
The freight rate increase is due to higher cargo volume and space shortages caused by adopting the Cape of Good Hope detour route.
Although there is uncertainty regarding freight rate forecasts after the third quarter, short-term earnings upgrades and stock price increases are expected to continue.
The second-quarter results are anticipated to show a surprise performance with sales of 2.9546 trillion KRW and operating profit of 789.3 billion KRW.
HMM's remaining perpetual bonds will convert to 172 million shares in 2024 and 144 million shares in 2025, resulting in approximately 1.025 billion shares outstanding upon conversion. Considering this, the book value per share (BPS) for 2024 is 27,492 KRW, and the 2025 BPS is 25,263 KRW. The average price-to-book ratio (PBR) for global container shipping companies in 2024 is 0.94 times, and the average price-to-earnings ratio (PER) is about 14.7 times.
Even after accounting for all perpetual bond conversions, HMM is undervalued compared to global container shipping companies. Researchers Yang Ji-hwan and Lee Ji-ni of Daishin Securities stated, "We believe there is no reason for HMM, which records the world's top-level container fleet and operating profit margin, to be undervalued."
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