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 percent, 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 Co. dropped 18 percent, the most since its January 1985 debut. The two stocks were the worst performers Thursday on the benchmark Kospi index.
The Busan, South Korea-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 labor disputes. The company had 233.5 billion won ($195 million) in cash and cash equivalents at the end of September, down from 350.5 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 Co. in Seoul. “The Philippines yard hasn’t been generating much business because there are so many delays in delivering the ships to customers.”
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 container boxes and gas, while its facility in South Korea focuses on smaller vessels. Hanjin Heavy also invested in an industrial complex in the Philippines.