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[Alpha Biz= Kim Sangjin] NH Investment & Securities Expects Strong First Half for HMM Amid Continued Freight Rate Strength
NH Investment & Securities expects HMM to report strong performance in the first half of this year due to favorable supply factors such as sustained freight rate strength.
In a report released on the 9th, NH Investment & Securities stated, "Initially, container freight rates were expected to stabilize downward due to the introduction of new ships and concerns over economic slowdown. However, since early December last year, freight rates have started to rise again." The firm predicts that freight rate strength will continue in Q1 and that HMM's operating profit will exceed market consensus for the year.
The Shanghai Containerized Freight Index (SCFI) stood at 2,505 points on the 3rd, up 129.1% compared to the previous year. Factors contributing to the freight rate increase include the potential for labor strikes at U.S. East Coast ports, preemptive cargo transport ahead of U.S. import tariffs, better-than-expected U.S. economic performance, and upcoming alliance changes in February.
NH Investment & Securities highlighted that a potential strike at U.S. East Coast ports by January 15th could further drive up container freight rates due to surcharges. Additionally, the alliance changes in February are expected to lead to temporary service inefficiencies and further rate increases.
While the reopening of the Red Sea could be a downward pressure on freight rates, NH Investment & Securities noted that the resumption of passage is still uncertain. Even if geopolitical tensions in the Middle East ease, considering the alliance reshuffling and the introduction of new services, it is expected to take about six months for services to stabilize, with the resumption of passage unlikely to occur until the first half of 2025.
NH Investment & Securities forecasts HMM's 2023 revenue to reach 11.446 trillion KRW and operating profit to amount to 3.221 trillion KRW.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
