[Click eStock] "HD Hyundai Heavy Industries, Quarterly Performance Improvement Continues... Target Price Up"

Target Price Raised by 4.8% Compared to Previous Level

KB Securities on the 8th raised the target price for HD Hyundai Heavy Industries from 210,000 KRW to 220,000 KRW, expecting the quarterly earnings improvement trend to continue. The investment rating was maintained at 'Buy.'

Jung Dong-ik, a researcher at KB Securities, explained, "Reflecting changes in earnings estimates, the target price was raised by 4.8% compared to the previous level," adding, "With the target price increase, there is a 23.0% upside potential compared to the previous closing price, so the investment rating is maintained."

HD Hyundai Heavy Industries' new shipbuilding and offshore orders this year reached 6.8 billion USD (approximately 9.1562 trillion KRW), a 7.6% increase from 6.32 billion USD in the same period last year. Researcher Jung said, "Accordingly, the achievement rate against the new order target of 7.2 billion USD set at the beginning of the year is 94.4%," and analyzed, "In particular, this year's new orders are mainly for relatively profitable gas carriers such as 12 ultra-large ammonia carriers (VLAC), 7 LPG carriers, and 3 LNG carriers, which will contribute to future earnings improvement." Including the engine and machinery divisions, total new orders amounted to 8.94 billion USD, a 4.0% increase compared to the same period last year.

Supported by strong new orders, the order backlog based on sales in the shipbuilding and offshore division at the end of August stood at 28.08 billion USD, an increase of 1.28 billion USD from 26.8 billion USD at the end of last year. Researcher Jung stated, "This corresponds to about 3.2 years of work compared to the expected sales of 16.9 trillion KRW in this division this year," adding, "In particular, the offshore plant division, which saw its sales-based order backlog fall to 1.56 billion USD at the end of last year, succeeded in securing 1.2 billion USD in orders this year, increasing the order backlog to 2.45 billion USD, which should help escape from sales decline and losses caused by a shortage of work."

HD Hyundai Heavy Industries' third-quarter earnings this year are expected to meet market forecasts. Researcher Jung said, "Third-quarter sales are expected to increase by 26.2% year-on-year to 3.6023 trillion KRW, and operating profit is expected to rise by 1458.8% to 201.2 billion KRW. Sales will slightly miss the consensus (average securities firm forecast), but operating profit will slightly exceed market expectations," explaining, "The rise in shipbuilding prices, improvement in product mix, reduction in outsourcing processing costs due to process stabilization, and decline in steel plate prices are estimated to have positively impacted third-quarter earnings." He added, "With the rise in shipbuilding prices and the decline in steel plate prices, the quarterly earnings improvement trend is expected to continue beyond the fourth quarter."