[Click eStock] "Sharp Rise in Shipbuilding Stocks... Focus on Mid- to Long-Term Growth Potential"

Recently, as the stock prices of the shipbuilding sector surged, concerns about valuation (the level of stock price relative to corporate value) have increased. However, securities analysts suggest that more attention should now be paid to medium- to long-term growth potential.

On the 2nd, Lee Dongheon, a research fellow at Shinhan Investment Corp., stated, "Although the price-to-book ratio (PBR) of shipbuilders has risen to 3 to 4 times due to the recent stock price surge, if medium- to long-term growth is guaranteed, it will bring future value closer," adding, "Now is the time to relieve the burden of peak-out (reaching a peak and entering a decline phase) and confirm medium- to long-term growth."

Last year, new orders for shipbuilders reached $35.8 billion (approximately 53 trillion KRW), marking a 21% increase compared to the same period in 2023. As of November last year, the five major shipbuilders recorded orders for 237 vessels, including 25 tankers, 25 ultra-large eco-friendly ammonia carriers (VLAC), and 62 petrochemical product carriers (PC ships), showing a growth trend. Although there were concerns about a peak-out last year, orders increased steadily.

The domestic and international conditions this year are also favorable. With demand from the US, India, and others joining in, medium- to long-term growth is secured. The research fellow said, "Domestic shipbuilders still hold an advantage in price negotiations due to a robust order backlog of over three and a half years," and added, "New orders and ship prices in 2025 are expected to continue the favorable trend from last year."

Meanwhile, the recent KRW-USD exchange rate surged 15% to 1,476 KRW compared to early last year. The prices of steel plates in Korea and China fell by 7% and 13%, respectively, to $754 and $493 per ton. Labor cost increases have eased, and foreign workers are settling in.

Lee said, "We are improving productivity through process enhancements and reducing costs. In addition to the stability of orders and performance this year, we have also reflected the upward momentum from medium- to long-term growth," adding, "Partnerships with the US and India are also promising. Korea’s shipbuilding industry is strengthening its position as a cooperative partner for both naval and commercial vessels."