[Featured Stock] HMM Rises... US Imposes Port Entry Fees on Chinese Ships

As of 9:20 AM on the 18th, HMM's stock price on the Korea Exchange is trading at 20,600 KRW, up 6.90% from the previous closing price. This appears to be due to news that the United States will impose port entry fees on Chinese vessels.

Earlier, on the 17th (local time), the U.S. Trade Representative (USTR) announced in a press release that it has decided to impose U.S. port entry fees on Chinese shipping companies, shipping companies operating Chinese-built vessels, and car carriers built abroad. The fees will be charged per net ton of the vessel. The fees will be gradually imposed starting October 14 after a 180-day grace period, with rates increasing annually.

Expectations have grown that HMM will benefit because the fees apply not only to vessels owned by Chinese shipping companies but also to vessels built in China. According to LS Securities, HMM, which has ordered most of its vessels from the three major domestic shipbuilders, owns only 5 Chinese-built vessels out of 82 container ships. Among these 5, two chartered vessels (leased ships) are expected to be returned soon due to lease expiration. The three company-owned vessels are small ships of about 1,700 TEU (1 TEU equals one 20-foot container) mainly deployed on Southeast Asia routes rather than trans-Pacific routes.

LS Securities stated, "The USTR sanctions are unlikely to drive a reversal in the market trend," but added, "However, amid the downward trend in the industry and increasing cost burdens from USTR sanctions, HMM is expected to maintain higher profitability and operational strength compared to global competitors."

Meanwhile, HMM disclosed that the conversion rights for 720 billion KRW worth of convertible bonds held by the Korea Development Bank and the Korea Ocean Business Corporation were exercised the previous day. As a result, the shareholding ratio of KDB and the Korea Ocean Business Corporation in HMM will increase from 67% to 72%, and KDB's BIS capital adequacy ratio will slightly decline. There are forecasts that HMM will repurchase and cancel about 2 trillion KRW worth of treasury shares held by KDB this year.