Hanjin on watchlist before possible downgrade, Hyundai MM stock sinks
KOREA Investors Service, a credit rating agency, has put Hanjin Shipping on a watchlist for a potential downgrade as the company struggles with poor markets, particularly in containers and dry bulk, reports IHS Media.
Bloomberg also reports Hanjin Heavy Industries & Construction Co., South Korea's first shipyard, dropped to a record low in Seoul trading as the company seeks to restructure its debt with creditors.
Shares of Hanjin Heavy fell 22 per cent, the biggest decline since the stock started trading in September 2007, to close at 2,935 won in Seoul. Its parent Hanjin Heavy Industries & Construction Holdings dropped 18 per cent, the most since its January 1985 debut.
The Busan-based company is expected to post its sixth consecutive year of losses in 2015 because of weak demand for ships, investment in a shipyard in the Philippines and labour disputes.
The company had KRW233.5 billion (US$195 million) in cash and cash equivalents at the end of September, down from KRW350.5 billion won at the end of 2014.
"The weakening demand for new ships is hitting Hanjin Heavy,?said Park Moo Hyun, an analyst at Hana Daetoo Securities in Seoul.
"The Philippines yard hasn't been generating much business because there are so many delays in delivering the ships to customers,?he said.
Hanjin Heavy built a shipyard in Subic, a special economic zone west of Manila, and delivered its first vessel from the yard in July 2008.
Hanjin Heavy uses the yard to build big ships that can move containers and gas, while its facility in South Korea focuses on smaller vessels. Hanjin Heavy also invested in an industrial complex in the Philippines.
Separately, Bloomberg reports Hyundai Merchant Marine stock fell on growing concern about its liquidity after a failed asset sale and credit downgrade.
South Korea's second-largest shipping company by sales plunged 17 per cent to KRW2,315, the lowest in more than 12 years, on speculation it may be forced to seek court receivership as it struggles to pay back debts.
Kim Sang-hoon, analyst at Shinhan Investment, said: "Investors are concerned about the liquidity crunch at HMM and they think it could be easier for Hanjin to take over HMM if the latter goes into receivership.?
HMM and Hanjin, which handle the bulk of their country's exports, have been hit by a year-long-drop in outbound shipments partly due to the slowing economy in China, South Korea's largest trading partner.
Hyundai suffered an operating loss of KRW126.9 billion in the first nine months of last year and is unlikely to return to profit this year as shipping rates continue to fall amid overcapacity and slowing trade globally.
KOREA Investors Service, a credit rating agency, has put Hanjin Shipping on a watchlist for a potential downgrade as the company struggles with poor markets, particularly in containers and dry bulk, reports IHS Media.
Bloomberg also reports Hanjin Heavy Industries & Construction Co., South Korea's first shipyard, dropped to a record low in Seoul trading as the company seeks to restructure its debt with creditors.
Shares of Hanjin Heavy fell 22 per cent, the biggest decline since the stock started trading in September 2007, to close at 2,935 won in Seoul. Its parent Hanjin Heavy Industries & Construction Holdings dropped 18 per cent, the most since its January 1985 debut.
The Busan-based company is expected to post its sixth consecutive year of losses in 2015 because of weak demand for ships, investment in a shipyard in the Philippines and labour disputes.
The company had KRW233.5 billion (US$195 million) in cash and cash equivalents at the end of September, down from KRW350.5 billion won at the end of 2014.
"The weakening demand for new ships is hitting Hanjin Heavy,?said Park Moo Hyun, an analyst at Hana Daetoo Securities in Seoul.
"The Philippines yard hasn't been generating much business because there are so many delays in delivering the ships to customers,?he said.
Hanjin Heavy built a shipyard in Subic, a special economic zone west of Manila, and delivered its first vessel from the yard in July 2008.
Hanjin Heavy uses the yard to build big ships that can move containers and gas, while its facility in South Korea focuses on smaller vessels. Hanjin Heavy also invested in an industrial complex in the Philippines.
Separately, Bloomberg reports Hyundai Merchant Marine stock fell on growing concern about its liquidity after a failed asset sale and credit downgrade.
South Korea's second-largest shipping company by sales plunged 17 per cent to KRW2,315, the lowest in more than 12 years, on speculation it may be forced to seek court receivership as it struggles to pay back debts.
Kim Sang-hoon, analyst at Shinhan Investment, said: "Investors are concerned about the liquidity crunch at HMM and they think it could be easier for Hanjin to take over HMM if the latter goes into receivership.?
HMM and Hanjin, which handle the bulk of their country's exports, have been hit by a year-long-drop in outbound shipments partly due to the slowing economy in China, South Korea's largest trading partner.
Hyundai suffered an operating loss of KRW126.9 billion in the first nine months of last year and is unlikely to return to profit this year as shipping rates continue to fall amid overcapacity and slowing trade globally.