[Click eStock] "HD Hyundai Heavy Industries, Strong Performance and Orders Expected... Target Price Up"

On the 16th, SK Securities maintained its 'Buy' rating on HD Hyundai Heavy Industries, citing strong expectations for both earnings and orders, and raised the target price from the previous 242,000 KRW to 370,000 KRW.

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SK Securities forecasted that HD Hyundai Heavy Industries' sales in the fourth quarter of last year would increase by 18% year-on-year to 4.0274 trillion KRW, and operating profit would rise by 111% to 293.1 billion KRW. Seunghan Han, a researcher at SK Securities, explained, "The increase in operating days, improvement in vessel type mix, continued effects of process improvements, decline in raw material prices, and rise in exchange rates collectively contributed to earnings improvement, surpassing the market expectation of 252.8 billion KRW."

Regarding orders, Han said, "Among the three HD Hyundai shipbuilding companies, HD Hyundai Heavy Industries is the only one that set a higher order target compared to last year's performance. Considering the expansion of global liquefied natural gas (LNG) project investments including North America, the volume of LNG carriers (LNGC), container ship orders planned by Taiwan, Korea, and lower-tier liners, as well as targeted offshore plant and special vessel volumes, exceeding this year's order target is quite feasible."

On earnings, he added, "This year, the gradual reduction of losses in the offshore division, along with continued ship price increases and vessel type mix effects in the merchant ship division, are expected. With low steel prices and a sustained high exchange rate trend, the earnings improvement momentum is likely to continue. It is anticipated that from as early as the first quarter, annual orders for about 2 to 3 U.S. Navy ship MRO (maintenance, repair, and operations) projects could be secured. Although it will take time, the possibility of securing orders for the U.S. mainland fleet should also be considered through related legal amendments or the enactment of exception clauses."

He concluded, "The world's best shipbuilding and engine manufacturing technology, along with a strong supply chain, will serve as factors that can alleviate valuation concerns."