[Click eStock] "High Rock Korea, Increased Orders and Performance Due to High Oil Prices"

Hi Investment & Securities analyzed on the 25th that Hi-Lok Korea's orders and performance are expected to increase due to high oil prices. No investment opinion or target price was provided.

Hi-Lok Korea's annual new orders were KRW 138.8 billion in 2018, KRW 134.1 billion in 2019, KRW 129.3 billion in 2020, KRW 142.3 billion in 2021, KRW 192.8 billion in 2022, and KRW 95.1 billion in the first half of this year. Lee Sang-heon, a researcher at Hi Investment & Securities, said, "Last year, as the high oil price trend became full-fledged, various projects such as petrochemical and LNG resumed, leading to an increase in new plant-related orders," adding, "This year as well, due to the continued high oil prices, plant orders are expected to continue, with new orders exceeding KRW 190 billion anticipated."

In particular, with the expansion of offshore plant orders, the increase in orders is expected to benefit Hi-Lok Korea. He explained, "Since the Ukraine crisis, Europe, which is restricting energy imports from Russia, is increasing imports of crude oil, petroleum products, and LNG from the U.S. and the Middle East, while expanding FSRUs centered on Germany to prepare for winter energy demand," adding, "Energy security along with continuous oil price increases is driving the expansion of offshore plant investments."

He stated, "Offshore plants require advanced technology and have a much higher price per unit than general ships, making them high value-added facilities," and added, "With the expansion of offshore plant investments, orders for domestic shipbuilders are expected to become visible." He further added, "As orders for domestic shipbuilders related to offshore plants are expected to increase, Hi-Lok Korea is also expected to benefit from the increase in orders."

Hi-Lok Korea recorded sales of KRW 95.3 billion and operating profit of KRW 26.6 billion in the first half of this year, representing increases of 11.6% and 70.5% respectively compared to the same period last year. He emphasized, "This is due to the leverage effect from sales growth and the pass-through of raw material price increases to product prices," adding, "Under these conditions, the expansion of LNG and offshore plant project orders is leading to an increase in new orders, which is expected to enhance the sustainability of performance improvements next year as well as this year."