SM Line CEO, Park Kee-hoon said that investing excess funds from company profits in HMM is generating better returns than leaving the money in the bank where it will earn a lowly interest.
SM Line now holds a 6.29% stake in its larger and fellow South Korean liner operator after buying HMM’s stocks on several occasions going back to December 2021, but Park insisted that his company does not intend to acquire its rival.
Speaking at a press conference on 25 July, Park said, “We recorded an operating profit of US$1.53 billion last year and more than US$581.85 million in the first half of this year, which is a situation where we have a lot of cash. The board decided to invest a certain part of (the cash) because even if we put the cash in the bank, the interest earned is less than 1%.
“HMM’s market capitalisation is over US$9.18 billion and the size of the convertible bonds (CB) held by KDB and KOBC is large. The size of SM Group’s assets is expected to be US$13.77 billion at the end of this year, which means that the group can only acquire one company.”
HMM’s state-controlled shareholders, Korea Development Bank, Korea Ocean Business Corporation and Korea Credit Guarantee Fund, have a combined stake of at least 45%.
Park said that while SM Line pushed back its initial public offering last November, due to difficulty in properly valuing the company, a listing would be revisited in the next two years.
With regard to fleet expansion, Park said that high newbuilding prices are a great deterrent.
He said, “The (shipping) market is good right now, but if we order ships, the vessels will be used for at least 15 years and will be a burden in the future. Our top priority is the expansion of our services to the North American west coast.”
Martina Li
Asia Correspondent
