Hyundai Glovis is forecast to spend around KRW 300bn ($252m) in 2020 on newbuildings, according to analysts who follow the company.
The orders are expected to be placed on the back of a growing volume of long-term contracts with car maker’s overseas plants, said Joshua Yang and Jane Lee of Daishin Securities.
The two Seoul-based analysts said they Hyundai Glovis will be looking to tap the corporate bond market to help fund the newbuilding investment.
Affiliated company Kia Motors saw its Indian factory, which has an annual production capacity of about 60,000 cars, came online in the second half of 2019.
However, the Daishin Securities analysts said that this is estimated to increase to 160,000-180,000 during 2020, giving a boost to Hyundai Glovis.
Hyundai Glovis recently reported fourth quarter earnings, which saw its shipping arm post revenue of KRW 788.3bn, down 6% year-on-year. It also logged an operating profit of KRW 50bn, which was up over 60% year-on-year.
Its car carrier arm saw revenue jump 21.4% year-on-year to KRW 542.8bn. Meanwhile, the load factor for finished cars climbed to 68%.
In contrast, its bulk shipping arm saw revenue slide over 37% to KRW 245.5bn as it downsized its spot market activity reducing its chartered-in fleet from 26 to 18 vessels.
At the end of the fourth quarter, Hyundai Glovis operated more than 90 vessels – 33 owned, 31 long-term chartered and more than 30 on short-term charters.
The logistics service provider has agreed to pay a dividend for 2019 of KRW 3,500 per share, which is KRW 200 higher than in 2018.
TradeWinds recently reported last month that Hyundai Glovis had ordered a VLCC newbuilding at Hyundai Heavy Industries for delivery in late 2021.
The scrubber-fitted ship, priced at a reported $94m, was said to have been ordered on the back of a 10-year charter to domestic oil company Hyundai Oilbank.
