[Click e-Stock] "HD Hyundai Marine Solution Expected to Sustain Annual Engine Parts Growth of Over 40%"

High Growth Secured by Expansion of Eco-Friendly Ships

There is an outlook that the growth of HD Hyundai Marine Solution’s engine parts division will continue for the time being. Analysts suggest that as the transition to eco-friendly ships accelerates in the future, the volume of orders may further increase.

On May 7, Daol Investment & Securities maintained its 'Buy' investment rating for HD Hyundai Marine Solution and raised its target price by 9.5% to 2.3 million won. The previous trading day's closing price was 1.53 million won.

Strong performance and growth prospects are cited as the reasons. In the first quarter of this year, HD Hyundai Marine Solution posted sales of 485.6 billion won and operating profit of 83 billion won, up 27% and 61%, respectively, compared to the same period last year, achieving a 'surprise result.' Profits from high-margin Himsen engines and DF engines increased, and the company also recorded better-than-expected earnings from its business of retrofitting FSU (Floating Storage Units) to eco-friendly standards.

The main business, AM Solution, which is responsible for the maintenance and repair of ship engines, also performed well. Sales grew by 28% year-on-year, and among them, the highest-margin engine segment increased by 45%, driving the growth in overall profitability and profit scale for the company.

The sustainability of growth also received positive reviews. Currently, among the global fleet, LNG DF accounts for only 1.2% by number of vessels and 15% by order backlog. It is analyzed that the proportion of high-margin DF engine sales will inevitably increase by 2030. The fact that the 83rd Marine Environment Protection Committee (MPEC) is preparing to implement a global carbon tax, which is accelerating new orders for DF engine ships, is also a positive factor.

Choi Kwangsik, a researcher at Daol Investment & Securities, explained, "HD Hyundai Marine Solution is expected to sustain rapid growth for more than a decade," adding, "Although the 20% stake invested by the overseas private equity fund manager Kohlberg Kravis Roberts (KKR) will be released from trading restrictions on the 20th of this month, making a block deal (large-scale off-market transaction) possible, it is unlikely to proceed in a way that would shock the market due to its size."