[Click eStock] "HD Hyundai Heavy Industries, Continued Profitability Improvement... Target Price Up"

Target Price Raised by 14% Compared to Previous Level

NH Investment & Securities raised the target price for HD Hyundai Heavy Industries from KRW 220,000 to KRW 250,000 on the 3rd, anticipating continued profitability improvement. The investment rating was maintained as 'Buy.'

Researcher Jeong Yeonseung of NH Investment & Securities stated, "We increased the operating profit margin estimates by 5-7% for 2025-2027, raising the target price by 14%," adding, "Profitability improvement will continue due to productivity enhancements and cost stabilization in the shipbuilding sector, as well as engine price increases."

On the cost side, the stabilization of thick plate prices and the resolution of labor strike risks following the conclusion of wage negotiations have eased the burden of rising labor costs, leading to stabilization of major expenses such as labor, outsourcing, and raw material costs. Researcher Jeong said, "If productivity improvements accumulate, there is potential to secure additional short-delivery new orders," and "In the engine sector, profitability improvement and engine price increases are expected to expand due to increased orders for China's LNG dual-fuel (DF) container ships."

HD Hyundai Heavy Industries, the world's leading large shipbuilder, is leading the rise in new ship prices and has proactively secured orders for new ship types such as methanol-powered container ships and ammonia carriers. Researcher Jeong forecasted, "For the time being, the order strategy will focus more on price increases than volume acquisition."

For further valuation expansion, increases in ship prices and orders for special vessels are necessary. Researcher Jeong commented, "To achieve additional valuation expansion, it is necessary to secure additional work through rising gas new ship prices, orders for special vessel export projects, and offshore orders," adding, "Since new ship prices for gas carriers, where Korean shipbuilders have strengths, have slightly declined recently, the scale of LNG carrier orders driven by U.S. LNG development projects will be the most critical variable."