HLAG.DE – Hapag-Lloyd

Fundamental analysis
The German container shipping company was formed by the merger of two companies in 1970 in Hamburg (HAPAG, founded 1847 and Lloyd, founded 1857). According to its own statement, the company celebrated 175 years since its foundation in 2022. It currently owns or charters 251 vessels for its own use and employs 14,248 staff, including 1,802 seafarers. Hapag-Lloyd is by no means the largest company in its industry, for example Maersk owns more than 700 vessels, almost 3 times as many. However, it also employs more than 95 000 workers, which is considerably more than Hapag-Lloyd. In terms of market capitalisation, however, Hapag-Lloyd is 30% larger than Maersk. The active share price is more than EUR 300. The company is currently doing very well.
Another reason for the company’s high share price is that only 3,6 % of the shares are freely tradable. All the other shares are owned by funds and private companies, but are not available on the Frankfurt Stock Exchange. Such a small volume of shares is extremely susceptible to any fluctuations or market sentiment of traders.
Results
The company operated with an average freight rate of USD 2,863/TEU in 2022 (USD 2,003/TEU in 2021). These are very high numbers due to increased demand during the Covid era and various other restrictions. However, the current price of a shipping unit from the port of Shanghai (Shanghai Containerized Freight Index) is about 920 USD/TEU. That is a huge difference. And according to experts, and Hapag-Lloyd’s expectations, the price will not increase again. This is due to several factors. The calming of the supply-customer situation, reduced demand for physical goods, China being closed until recently, many European and American companies are now sourcing less goods or directly considering moving production closer to their markets, either within Asia (e.g. from China to India or Southeast Asia) or directly to Europe and North America.
According to the published results, the company increased its EBITDA to USD 20.5 billion, EBIT to USD 18.5 billion and group profits increased to USD 18 billion. The company has therefore decided to pay out a large part of the profits to its shareholders. It plans a dividend of €63, which is more than 20% of the current share price (€303).
Technical analysis
The company reached its highest share price in May 2022 and since then the price has been declining until January 2023. After that, it is followed by strong growth again. It is now supported by the crossing of two long-term moving averages. This makes the trend upward again.
The RSI, on the other hand, indicates overboughtness, but this is due to the rapid rise in the share price in recent days. In the short term, however, such a high RSI may also indicate that the stock is now in a bull market.
Conclusion
Hapag-Lloyd is a very interesting company due to its announced dividend. It is not often that a company makes available both 20% of its share value (if we look at the dividend in terms of dividend/share price ratio) and a dividend of 63 euros (if we look at the dividend purely as an absolute value).
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