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Korean Logistics Firms Draw Foreign Investors
Analysts and industry experts said strong earnings and rising expectations for the government's plan to promote the nation's logistics industry should provide new growth momentum for the sector. "Rising foreign share buying has more to do with the booming business rather than any takeover attempt," said Lee Chang-mok, who covers the sector at Woori Securities Co. Overseas investors have a 43.8 percent stake in Hanjin Shipping with Norwegian shipping magnate John Fredriksen holding more than 5 percent.
On November 23, Geveran Trading Co. said it bought additional shares in Hyundai Merchant Marine Co., the country's No. 2 shipper. The Norwegian fund became the fourth-largest shareholder with a 7.42 percent stake from the previous 5.77 percent. Overseas investors hold 42.87 percent of the company's shares. For the past six months, Hanjin and Hyundai outperformed the benchmark index by 42 percent and 95 percent, respectively.
Korea's shipping industry has benefited from strong overseas sales and its proximity to China. Hanjin Shipping saw its operating profit rise 28 percent to 254 billion won in the third quarter on sales of 1.6 trillion won, 10 percent up from a year earlier. Analysts attribute the strong quarterly results to higher freight rates and growing shipping volume and forecast that its earnings momentum will continue for the rest of the year.
Hyundai Merchant Marine said last week that it would buy three ships for 168 billion won ($157 million) to expand its tanker business. To meet the surging demand for transport of fuel to China and Europe, the company said it would take delivery of one oil tanker in January and two oil product carriers in April and July next year.
The government plans to unveil its measures to nurture the comprehensive logistics companies in the first half of next year. Analysts expect the move to spell benefits for Hanjin Transportation Co., the country's second-largest overland transport company.
Under the plan, the government would provide tax benefits to companies that outsource more than 70 percent of logistics costs to expand the third-party logistics market. It intends to select the comprehensive logistics companies and provide tax benefits and support, should they meet three requirements including paid-in capital, sales and number of logistics services.
Hanjin Transportation, which has large-scale logistics complexes across the nation, is considered a prime candidate to be labeled a comprehensive logistics company, analysts say.
With the implementation of the policy, the nation's logistics services market is projected to reach 46 trillion won in 2007, 1.57 times the size in 2002, and 77 trillion won in 2010, according to industry insiders.