[Click e-Stock] "HMM's Public Tender Offer for Treasury Shares Brings Little Benefit to Investors...Caution Advised for New Investments"

On August 20, Daishin Securities commented on HMM, stating, "If major shareholders such as Korea Development Bank and Korea Ocean Business Corporation participate 100% in the company's public tender offer for treasury shares, the actual benefit to general investors will be minimal," and added, "At this point, new investments should be approached with caution." Accordingly, the investment opinion was maintained at 'Market Perform,' and the target price was kept at 23,000 won.

HMM has decided to conduct a public tender offer for treasury shares worth approximately 2.1 trillion won (about 81.8 million shares). The tender offer price is set at 26,200 won, which is about 14% higher than the current share price of 22,950 won. Regarding this, Yang Ji-hwan, a researcher at Daishin Securities, explained, "Since the number of shares in the tender offer accounts for only 7.98% of the total issued shares, competition is expected to be high, so the expected return is not likely to be significant."

He also pointed out that purchasing HMM at the current price could actually result in a negative return. Researcher Yang explained, "Even if the largest shareholders and related parties, who together hold 71.7% of shares (Korea Development Bank 36.02%, Korea Ocean Business Corporation 35.67%), do not participate in the tender offer, the share price must remain above 22,000 won after the offer for shareholders who bought at 23,000 won to avoid losses." He added, "If the share price remains at 23,000 won after the tender offer, a return of 1.1% to 3.9% is possible depending on the participation rate, but if the price drops to 22,000 won, losses may occur. In particular, if the price falls to the 21,000 won range, losses are expected in all cases."

He stated, "While I agree that reducing the number of shares enhances shareholder value, the largest shareholders and related parties are highly likely to participate in the tender offer, meaning the major shareholders will benefit the most," and emphasized, "Investors should not be lured by the tender offer price."