HD Hyundai Group Stocks Hit Consecutive Record Highs on Strong Earnings

HD Hyundai Heavy Industries, Marine Engine, and Mipo Hit 52-Week Highs During Trading
Group Stocks Rally on Strong First-Quarter Results
HD Hyundai Heavy Industries Sees 1,936% Surge in Q1 Operating Profit
HD Korea Shipbuilding & Offshore Engineering Achieves Eight Consecutive Quarters of Profit

HD Hyundai Group stocks showed strong performance in tandem, with many hitting new record highs, buoyed by robust first-quarter earnings this year. As shipbuilding stocks have surged since the beginning of the year, driving up group stock prices significantly, attention is focused on whether this momentum will continue with the addition of strong earnings results.

According to the Korea Exchange on April 25, HD Hyundai Heavy Industries closed at 376,000 won, up 2.45% from the previous day. During the session, it climbed to 382,500 won, setting a new 52-week high. HD Hyundai Mipo ended the day up 15.11% at 158,500 won, also marking a 52-week high. HD Hyundai Marine Engine rose 2.66%, reaching 35,900 won intraday, again renewing its 52-week high. Additionally, HD Korea Shipbuilding & Offshore Engineering gained 6.85%, HD Hyundai Construction Equipment rose 3.08%, and HD Hyundai Infracore increased by 1.11%.

Strong first-quarter results, especially among shipbuilding stocks, led to the group-wide rally. On the previous day, HD Korea Shipbuilding & Offshore Engineering, the intermediate holding company for HD Hyundai's shipbuilding business, announced that its consolidated operating profit for the first quarter of this year was tentatively tallied at 859.2 billion won, up 436.3% from the same period last year. During the same period, revenue rose by 22.8% to 6.7717 trillion won, and net profit increased by 216.4% to 611.6 billion won. HD Korea Shipbuilding & Offshore Engineering has now achieved eight consecutive quarters of profitability since the second quarter of 2023.

HD Hyundai Heavy Industries reported that its first-quarter operating profit surged 1,936.2% year-on-year to 433.7 billion won. This figure significantly exceeded the consensus estimate of 262.7 billion won compiled by FnGuide. Revenue for the same period rose 27.9% to 3.8225 trillion won, while net profit jumped 893.7% to 284.2 billion won.

HD Hyundai Samho and HD Hyundai Mipo recorded revenue of 1.9664 trillion won and 1.1838 trillion won, and operating profit of 365.9 billion won and 68.5 billion won, respectively. In the ship engine segment, affiliate HD Hyundai Marine Engine posted revenue of 83 billion won, up 35.3% year-on-year, and operating profit of 10.3 billion won, up 64.4%.

Han Youngsoo, a researcher at Samsung Securities, stated, "HD Hyundai Group's shipbuilding companies are expected to meet market expectations, as both their long-term and short-term profitability remain higher than competitors, thanks to risk management and economies of scale."

Although most group companies saw gains, HD Hyundai Electric did not share in the rally. Despite reporting solid results earlier, HD Hyundai Electric's stock has been on a continuous decline due to concerns about a potential peak-out (passing the earnings peak). On April 22, HD Hyundai Electric announced that its consolidated operating profit for the first quarter of this year was 218.2 billion won, up 69.4% year-on-year. Revenue increased by 26.7% to 1.0147 trillion won, marking the first time that HD Hyundai Electric's quarterly revenue exceeded 1 trillion won. Net profit rose by 64.2% to 153.4 billion won. However, the stock price fell sharply for three consecutive days, dropping below the 300,000 won mark. A researcher analyzed, "Even though first-quarter results exceeded expectations, the stock price fell 9% after the earnings announcement. This was due to concerns about a peak in profit margins. Most of the undelivered products from the fourth quarter of last year were recognized as sales, resulting in high-margin North American sales doubling compared to the previous quarter, but the overall operating margin improvement for the first quarter was only 1.1 percentage points. As a result, some investors are concerned about the risk of declining profitability if North American sales decrease in the future." The researcher added, "The increase in North American sales in the first quarter is not a one-off event, and concerns about a drop in profit margins are excessive."