[Click eStock] HD Hyundai Heavy Industries Nears New Shipbuilding Price Peak... Target Price Raised to 230,000 KRW+

DS Investment & Securities raised the target price for HD Hyundai Heavy Industries to 230,000 KRW on the 30th, expecting profit growth to continue for several years. The investment rating was maintained at 'Buy.'

Yang Hyung-mo, a researcher at DS Investment & Securities, stated in the report, "Unlike past cycles when shipyards increased indiscriminately, this cycle is expected to benefit more from the surviving shipyards. The current cycle, which began in 2020, is just at the start of a turnaround and still in its early to mid-phase. Unless an economic crisis occurs, the annual ROE is unlikely to decline for the next several years," he analyzed.

For this reason, he advised, "Investors should increase their weighting in the shipbuilding industry during the downtime and buy HD Hyundai Heavy Industries before the order volume increases in September and October."

HD Hyundai Heavy Industries entered a correction phase throughout August, with institutional investors responding with continuous selling. After the Q2 earnings announcement at the end of July, the company entered an order hiatus period, leaving no momentum to drive the stock price. Although the stock performance was strong, the desire for profit-taking inevitably increased. Amid concerns over sales decline due to poor operating days and emerging union strike issues, HD Hyundai Heavy Industries' stock price fell by an average of only 8%.

Researcher Yang said, "The reason the correction was not significant is that we already confirmed the possibility of profit growth in the company's Q2 earnings. Therefore, even if future quarterly results fall short of expectations, it will not have a major impact. The union strike issue is also presumed to be merely an annual event."

He expected that new ship prices would level up as large-scale series orders begin. The Clarkson Newbuilding Price Index is already at 188.83, approaching the historic peak of 191.58 during the super boom on September 8, 2008. At this rate, new ship prices are expected to surpass the peak within 2 to 3 months at the latest.

Researcher Yang added, "Hapag-Lloyd is negotiating orders for 30 container ships. Maersk has also mentioned ordering 800,000 TEU container ships. Other container shipping companies may join the order rush for economies of scale. Qatar will soon place orders for LNG carriers worth approximately 5 billion USD. When such large-scale series orders occur, ship prices will rise sharply," he forecasted.