Janggeum Shipping, a mid-sized South Korean shipping company, has secured over 5% of the shares in logistics firm Hanjin, drawing attention to the reasons behind this investment. While Janggeum Shipping has stated that the purpose of the acquisition is for simple investment, analysts suggest that Hanjin's low corporate valuation and the two companies' 20-year business relationship may have influenced this decision.
According to the Financial Supervisory Service's electronic disclosure system, as of October 2, Janggeum Shipping holds 866,413 shares of Hanjin, representing a 5.58% stake. The company has reported that the purpose of the acquisition is not to influence management but rather for investment purposes.
Janggeum Shipping's stake in Hanjin increased from 4.92% on September 23 after acquiring an additional 102,558 shares over five days. Based on the current stock price, the value of the shares held is approximately 14 billion won.
Industry experts are paying attention to Hanjin's low valuation. Last year, Hanjin reported consolidated revenue of 3.06 trillion won and an operating profit of 112.1 billion won, but its recent price-to-book ratio (PBR) has remained around 0.18.
Hanjin's extensive logistics infrastructure, including container terminals and logistics centers in Busan, Incheon, and Pyeongtaek, is also considered a factor in the investment.
The business relationship between the two companies dates back to 2004 when Janggeum Shipping participated in the Pyeongtaek Port container terminal project alongside Hanjin Shipping and Hanjin. After Hanjin Shipping divested its shares, Hanjin became the largest shareholder of the Pyeongtaek Container Terminal.
Currently, Hanjin holds a 68% stake in the terminal, while Janggeum Shipping owns 16.5%. Janggeum Shipping is the second-largest shareholder and a major customer of the terminal. This acquisition of shares expands the mutual interests of both companies from the terminal business to Hanjin's headquarters.
Janggeum Shipping has a history of expanding its business through equity investments. In 2021, it invested 102 billion won in HMM, which was undergoing a workout, securing an 85.31% stake before selling part of its shares during the management normalization process. This year, it transferred 50% of its stake in its tanker subsidiary, Janggeum Maritime, to the world's largest shipping company, MSC, to collaborate on very large crude carrier (VLCC) operations.
However, many analysts believe it is premature to link this share acquisition directly to mergers and acquisitions or management participation. Hanjin's largest shareholder, Hanjin Kal, holds a 29.64% stake, and when including related parties, this rises to 33.08%.
* This article has been translated by AI.
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