[Click eStock] "HD Hyundai Mipo, Slow Earnings Improvement... Target Price Down"

NH Investment & Securities forecasted on the 18th that HD Hyundai Mipo's earnings improvement will be slow until the first half of this year and lowered the target stock price by 6% to 152,000 KRW.

Researcher Jeong Yeonseung of NH Investment & Securities explained, "Compared to major shipbuilders, the order momentum is weak, and earnings improvement is expected to be slow until the first half of this year," adding, "Reflecting this, we lowered the operating profit estimates for 2025 and 2026 by 5% and 13%, respectively."

HD Hyundai Mipo set an order target of 3.8 billion USD for this year and has secured 370 million USD so far. Notably, it secured orders for four LNG bunkering vessels at the beginning of the year. Researcher Jeong said, "With the increase in orders for vessels using LNG as fuel, demand for LNG bunkering vessels is expected to grow in the mid to long term," but also pointed out, "There are concerns about a contraction in orders for medium-range product carriers (MR tankers, based on 40~50Kdwt)." He analyzed that the easing of sanctions on Russia, increased inflow of Russian petroleum products, shortened transportation distances, and the possible entry of some shadow fleets into the normal market could lead to a decrease in orders.

Earnings improvement is expected to accelerate after the second half of this year. Researcher Jeong said, "The expected sales for Q1 are 1.15 trillion KRW (a 14.5% increase year-on-year), and operating profit is 39.7 billion KRW (turning to profit, operating margin of 3.5%)," explaining, "The impact of building low-profit vessels still remaining is causing the profitability improvement to be slower than expected." He added, "The improvement trend will become clear from the second half when the vessels ordered in 2024 are constructed," and "Considering the number of operating days, a full-fledged rebound is expected from Q4."