Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Maritime minister criticized for delaying HMM's privatization
Oceans and Fisheries Minister Moon Seong-hyeok / Yonhap
By Park Jae-hyuk
Shipping company expected to be less worth next year
By Park Jae-hyuk
Minority shareholders of HMM have leveled criticism at Oceans and Fisheries Minister Moon Seong-hyeok for reiterating that it is too early to privatize the container transportation and shipping company, despite its record earnings last year.
“There are prerequisites to selling HMM shares which are owned by Korea Development Bank (KDB) and the Korea Ocean Business Corp. (KOBC),” the minister told reporters, Wednesday. “Its management condition needs to be stabilized further over the next two to three years.”
He added that the government is expected to retrieve triple the amount it injected into HMM, once the shipping company is privatized.
His recent remarks came a few months after his press conference last December, in which he cited HMM's relatively low credit rating of “BBB-” as the main reason for the ministry's skepticism about the company's complete independence from the government.
In contrast, HMM's minority shareholders have called for prompt privatization, based on the belief that the deal will raise its stock price sharply.
They have claimed the timing is right for HMM's privatization, considering the recent improvement in the global shipping industry, which enabled the company's 2021 operating profit to rise 652 percent year-on-year to a record 7.37 trillion won ($6.1 billion) and its annual sales to reach 13.7 trillion won the same year, up 115 percent from 2020.
The latest nomination of former Hyundai Glovis CEO Kim Kyung-bae to lead HMM has also caused minority shareholders to anticipate Hyundai Motor Group's acquisition of the shipping company, despite the automotive group's continuous denials.
“We want the sale of HMM to be finished by the end of this year, because the lack of aggressive investments has deteriorated its competitiveness, blocking it from catching up with market leaders,” one of the minority shareholders wrote online.
KDB has also continued to indicate its intention to sell its stake in HMM.
Earlier this year, KDB Chairman Lee Dong-gull told reporters that the bank should sell parts of its stake gradually so as to pursue a smooth M&A deal. He also said last November that KDB should divest from HMM, because the shipping company has become “very profitable” recently.
Local securities analysts raised questions about the maritime ministry's hesitancy about selling HMM.
“Once the global supply chain bottlenecks are resolved next year in the wake of COVID-19's transition into an endemic disease, freight rates will become lower,” Daishin Securities analyst Yang Ji-hwan said. “In that case, it will be difficult to sell HMM, so it would be better to privatize the company this year.”
The analyst expects KDB to sell its stake in HMM first, while allowing the buyer to have a call option to take over the remaining shares owned by KOBC later.
“It seems that KDB seeks to sell its stake as soon as possible, while the maritime ministry wants a slower sale,” he said. “The two institutions should talk with each other to reach an agreement.”