[Click eStock] "Hyundai Mipo Dockyard Expected to Show the Fastest Recovery"

Unlike other companies, being relatively free from risks is also considered an investment factor
Cape Investment & Securities "Hyundai Mipo Dockyard target price newly set at 95,000 won"

[Asia Economy Reporter Gong Byung-sun] Based on the volume of orders Hyundai Mipo Dockyard secured in the first half of this year, it is expected to show the fastest recovery next year. Additionally, unlike the three major domestic shipbuilders (Korea Shipbuilding & Offshore Engineering, Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industries), it is noted for being relatively free from risks.

On the 22nd, Cape Investment & Securities newly issued a 'Buy' rating for Hyundai Mipo Dockyard with a target price of 95,000 KRW. The closing price on the 19th was 72,500 KRW.

Most domestic shipbuilders showed solid order performance from the first half of the year, enough to meet their annual order targets, but their stock prices declined. This was due to the fact that earnings are reflected only after more than two years from the order date, and an earnings shock in Q2 this year caused by rising raw material prices also had an impact. Large vessels require about two years of construction time, and major domestic shipbuilders are expected to see performance improvements starting in 2023.

(Provided by Cape Investment & Securities)

Among them, Hyundai Mipo Dockyard is expected to show the fastest recovery within the industry. This is because the relatively high-value orders secured this year with a lead time (the time from order to delivery) shorter by more than one year will be recognized as sales starting next year. Furthermore, the order composition, which was concentrated on Petrochemical Carrier (PC) vessels, is expanding to include container ships, con-ro ships, and Liquefied Petroleum Gas Carriers (LPGC). In particular, container ships, whose profitability is improving, account for 20% of new orders.

It is also relatively free from risks. Korea Shipbuilding & Offshore Engineering faces risks related to the acquisition and merger of Daewoo Shipbuilding & Marine Engineering; Daewoo Shipbuilding & Marine Engineering has risks related to being acquired and drill ships; Samsung Heavy Industries has risks related to capital increases. However, Hyundai Mipo Dockyard enjoys the vertical integration advantages of Korea Shipbuilding & Offshore Engineering and is free from such risks. Kim Yong-min, a researcher at Cape Investment & Securities, explained, “When the trend of performance improvement arrives in the future, factors that could dampen investment sentiment are expected to be limited.”