[Click e-Stock] "SK Oceanplant: MRO New Business and Offshore Wind Power to Trigger Stock Price Rise"

Target Price Raised by 16%

On May 19, Meritz Securities maintained its 'Buy' rating on SK Oceanplant, stating, "Expectations for new business in ship maintenance, repair, and overhaul (MRO) and orders for offshore wind power are expected to drive the stock price higher." The firm also raised its target price by 16% to 22,000 won.

Moon Kyungwon, an analyst at Meritz Securities, commented, "From this year, the ship MRO business should be highlighted as a new business for the company." He added, "SK Oceanplant is actively participating in non-combat ship MRO tenders and is planning to secure at least one order." He continued, "The company plans to apply for a Maintenance, Supply, and Repair Agreement (MSRA) within the year and acquire it by 2026. With a target of securing orders for four to five ships annually, additional sales amounting to several hundred billion won are expected."

Cooperation with defense industry companies such as Hanwha Ocean was also evaluated positively. Analyst Moon stated, "Since 2017, the company has delivered more than 30 naval and coast guard vessels, and has performed repairs and conversions on around 30 LNG carriers, container ships, and other vessels each year. Considering this experience and the excellent facility infrastructure such as floating docks, SK Oceanplant is well-positioned to leverage its strengths in this business."

In the first quarter of this year, SK Oceanplant recorded a consolidated operating profit of 11 billion won, up 23.4% from the same period last year, surpassing the market expectation of 8.7 billion won. Analyst Moon explained, "Revenue from the Taiwan Pengmiao project began to be recognized in earnest from February, and revenue from the Hai Long upscoping project was also recognized, leading to increased sales in the offshore wind power segment. Sales of special-purpose ships also rose by 59% as revenue from the third ship of Batch 3 began to be recognized." He added, "Offshore wind power sales are expected to rise sharply from the fourth quarter, when revenue from the Anma Offshore Wind Power project will be recognized."

He further noted, "Orders for the Anma Offshore Wind Power project in Korea and the Weiranhai Offshore Wind Power project in Taiwan, expected by the third quarter, are seen as triggers for a stock price increase."