China’s Commodity Consumption Fuels Hyundai Heavy’s Record Profits
By Mike Caggeso
Associate Editor
China’s enormous importing and exporting demands had a huge hand in record third-quarter profits for the world’s largest shipbuilding company, Korea-based Hyundai Heavy Industries Co.
Profits rose to $479 million (434.7 billion won) from $232 million (210.7 billion won) a year earlier. Demand from China is fueling record earnings for several shipyards in South Korea, the world’s leading shipbuilding nation. Hyundai Heavy is growing so fast that it is backlogged with more than three years of orders, Bloomberg News reported. Increased vessel prices also helped drive earnings.
Hyundai Heavy produced and delivered 65 vessels in the first nine months of the year, at a value of $5.03 billion, according to the company’s web site. In nine months last year, those figures were 58 and $3.82 billion, respectively.
"Earnings will continue to grow as they build vessels from orders they won when prices rose," Song Jae Hak, an analyst at Woori Investment & Securities Co. in Seoul told Bloomberg. Song has a "buy" rating on Hyundai Heavy shares.
Unfortunately, U.S. investors can’t buy Hyundai Heavy, as the company isn’t registered with the U.S. Securities and Exchange Commission. However, they can target shipping companies in a unique position to capitalize on the booming Eastern markets. Many of those companies – like Hyundai Heavy – are reporting record profits, even with the massive order backlogs.
Dry-bulk shipping is the marine transportation of significant commodities in bulk, such as gold, or metal ores. And China siphon up those commodities up any faster. Most of the ports in the busiest countries are not big enough to handle the recent heavy surge in shipping traffic caused by the global boom.
And well-heeled investors have reaped gains of over 500% on this shipping boom.
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