HMM aims for the first operating profit ‘1 trillion won club’ since its inception, the key to scale up and stand alone

Input 2021.02.16 06:00

Securities company’s estimated operating profit of 2 trillion won this year, twice the preliminary value of last year
It seems to rise to the test whether it has self-sustainability without support such as a state-run bank

HMM(011200)It recorded an annual operating profit surplus for the first time in 10 years last year. This year, it is expected to generate trillions of operating profits for the first time since its inception on the back of strong container freight rates. However, it is evaluated that there are not a few tasks to be solved, such as scale expansion or privatization.

According to F&Guide, a financial information company on the 16th, securities firms’ HMM operating profit forecast this year is 2 trillion won. This is more than twice the amount of HMM’s provisional operating profit last year of 9808 billion won. The reason is the unprecedentedly high container freight rates. The’Shanghai Containership Freight Index (SCFI)’, a global container ship freight index, was 2825.75 points as of the 10th. Although it fell 58.87 points from the previous week, it remains strong considering the fact that it is the Chinese New Year holiday, when the volume of goods is reduced.

On the same day, the fare for HMM’s flagship route between Asia and North America was 3969 dollars per FEU (one 12m container), and the fare between Asia and Northern Europe was 4109 dollars per TEU (one 6m container). Compared to February of last year, it is 3 and 5 times, respectively.

Although there will be a freight rate adjustment in the first half of this year, the prediction that it will continue to be strong due to the problem of supply and demand for container ships is dominant. As a result of a survey by British shipping magazine Lois List, at the end of last year, the global containership fleet increased 2.5% from the beginning of the year. For the first time since 2016, the increase rate of fleet has been below the 3% range. In addition, if the decommissioning of old ships continues ahead of environmental regulations from the second half of this year, the structure of high freight rates can be maintained due to the lack of ships compared to the volume of cargo as last year.

If freight rates continue to be strong for a long time, HMM can draw a favorable deal with the shipper in the long-term freight rate contract (SC) scheduled for April. Bang Min-jin Eugene Investment & Securities (001200)The researcher said, “Although freight rates are expected to be adjusted after the Chinese New Year, basically, the supply and demand in the container ship market will be as tight as the previous year, so the average freight rate will be solid.” It is highly likely to do it.”

HMM is also busy moving to respond to market conditions. HMM expects the cost structure to improve if it receives eight 16,000 TEU-class container ships in the first half of this year. By investing 110 billion won, it plans to purchase 17,000 containers that are causing shortages by July. In November of last year, it decided to buy a container worth 229 billion won and started securing more. An HMM official said, “We plan to focus on improving profitability such as securing superior shippers and increasing operational efficiency.”

However, apart from the performance, there is an evaluation that there is a long way to go to increase competitiveness inside and outside HMM. HMM’s fleet is 860,000 TEU even if eight additional container ships to be delivered this year are added. It is less than 1.05 million TEU in 2016, before Hanjin Shipping went bankrupt.

In particular, there are concerns that HMM’s voice may give more voices as the shipbuilders of’The Alliance’, the maritime movement alliance to which HMM belongs, are increasing their scale. Hapak Lloyd, a German shipping company, ordered six 24,000 TEU-class container ships at the end of last year, and Ocean Network Express (ONE), an integrated corporation with three Japanese container companies, plans to introduce six 24,000 TEU-class container ships as a long-term charter system. to be.

There was also a problem of being alone. While investing policy funds into HMM, only the convertible bonds held by state-owned banks such as Korea Development Bank are approaching 3 trillion won. It is in the same vein that the sale of HMM was raised. The effect of the’Agreement on Implementation of Management Normalization Plan and Competitiveness Enhancement Plan’ between Korea Development Bank, Korea Ocean Promotion Corporation, and HMM is extended once, until the end of this year.

An official from the shipping industry said, “From the second half of this year, there will be a situation where global shipping companies will have to compete with their sales skills after the corona crisis,” and said, “We can evaluate whether HMM has self-sustainability without government support.”

HMM President Bae Jae-hoon also said in his New Year’s address, “If 2020 was the year of turning into a surplus in operating profit, in the new year, we need to lay the foundation for stable profit generation and prepare for new challenges by improving our constitution.” You will have to have the ability and management capabilities.”