Korea Ratings Changes Hanjin Co., Ltd. Outlook from 'Stable' to 'Positive'

On December 30, Korea Ratings announced that it would change the outlook for Hanjin Co., Ltd.'s unsecured bond rating from 'Stable' to 'Positive.'

Korea Ratings cited the gradual increase in operating profit and the easing of financial burdens due to reduced investment pressure as reasons for this change in the rating outlook.

First, Korea Ratings stated, "Given the solid operating performance of the stevedoring business, as well as improvements in operational efficiency and logistics infrastructure in the parcel delivery and global divisions, we expect a gradual increase in operating profit." Although the logistics division's container terminal stevedoring business saw a decline in performance this year due to the impact of customs duties, the parcel delivery division achieved improved logistics efficiency and performance, centered around the Mega Hub Terminal that opened in early 2024. The global division also saw an increase in profit generation.

Korea Ratings added, "Going forward, the stevedoring business is expected to support overall company performance, backed by the excellent location of Busan Port, which ranks seventh globally in container throughput, the company's competitive edge in container terminals, and a strong customer base." The agency also forecasted a gradual increase in operating profit, driven by expanded parcel delivery volume and improved operational efficiency in the parcel division, as well as strengthened overseas logistics infrastructure in the global division, including the opening of a beauty-dedicated fulfillment center in Amsterdam in December.

Financial burdens are also expected to ease. Korea Ratings noted, "With the completion of the Mega Hub Terminal in early 2024, average annual CAPEX, which was about 170 billion won from 2020 to 2023, has been reduced to around 90 billion won, leading to increased free cash flow." The agency added, "Although investment funds will continue to be required, the scale is not significant compared to the past, so financial burdens are expected to gradually ease, based on the company's internal cash generation." Korea Ratings also mentioned that Hanjin Co., Ltd. is planning to sell idle assets such as listed shares and regional sites, which could further contribute to reducing financial burdens.

Korea Ratings plans to closely monitor future developments, including changes in U.S. trade policy, the recovery level of stevedoring business volume, the extent and pace of improvement in operating profitability of the parcel delivery division, and the progress of idle asset sales.