[Click eStock] "HSD Engine Sales and Profit Margin Growth Expected... Target Price Up"

On the 14th, DS Investment & Securities raised its target price for HSD Engine to 13,000 KRW, stating that "earnings estimates and target prices for next year and 2025 have been revised upward." The buy rating was also maintained.

On the same day, Hyungmo Yang, a researcher at DS Investment & Securities, said, "HSD Engine recorded new orders worth 1.1 trillion KRW through the third quarter, marking over 1 trillion KRW in orders for three consecutive years," adding, "The order backlog, which was 2.1 trillion KRW at the end of last year, increased to 2.8 trillion KRW by the end of the third quarter. Considering that revenue is recognized at the time of delivery, this corresponds to three years' worth of work based on annual sales of 1 trillion KRW."

Shipbuilders place engine orders in the later stages of ship construction, and since there is a global shortage of engine manufacturers, future orders are expected to increase further. Benefits to Chinese shipyards will also begin in earnest from next year. Researcher Yang said, "In addition to domestic shipyards, major Chinese shipyards such as Yangzijiang Shipbuilding, the largest private shipbuilder in China, New Times Shipbuilding, and Shanghai Waigaoqiao Shipbuilding are placing engine orders with HSD Engine," adding, "Large-scale orders will occur starting from the first quarter of next year."

He continued, "Revenue growth and margin improvement will begin from this fourth quarter. We expect average quarterly sales of 250 billion KRW and mid-single-digit profit margins (4-6%) next year," adding, "By 2025, average quarterly sales are expected to exceed 300 billion KRW, with profit margins potentially reaching double digits. Since engine prices are rising in tandem with ship prices, the margins estimated by HSD Engine are fully achievable," he added.