[Click eStock] "SK Ocean Plant, Target Price 22,000 Won... Downgraded by 12%"

Meritz Securities on the 20th lowered the target price of SK Ocean Plant by 12% to 22,000 KRW from the previous estimate.

The operating profit for the first quarter recorded 8.9 billion KRW, falling short of consensus. Although an overall decline in sales was expected due to the order backlog, the first quarter profit was analyzed as a bottom due to deferred sales and increased selling and administrative expenses.

From the second quarter, sales of special vessels are expected to increase, leading to a recovery in the top line, and offshore wind power sales are projected to show an upward trend starting in the second half of the year.

The offshore wind power order in Taiwan, which had been delayed due to issues such as design changes, is expected to be completed within the first half of the year. An additional order in the fourth quarter is also anticipated. The upscoping orders that have been coming in since May are expected to contribute to annual orders exceeding 100 billion KRW.

It was noted that the Taiwanese local company has taken on parts that are difficult to produce, resulting in excellent profitability. It was analyzed that the order guidance of 1.3 trillion KRW can be sufficiently achieved with just the Taiwan offshore wind power and some plant businesses.

Researchers Kyungwon Moon and Dongjun Yoo of Meritz Securities said, "Domestic offshore wind power, including Anma offshore wind power which is preparing for re-bidding within the year, is a plus alpha," adding, "Attention should also be paid to policy momentum, as there is still a possibility of passing the Offshore Wind Power Special Act within the May National Assembly term."

They added, "Even without the passage of the special act, the domestic market outlook is bright as floating offshore wind power complexes in Ulsan have entered the main environmental and nutritional evaluation consultations in large numbers since the beginning of the year under the current permit system."