Hanwha Ocean Achieves Both Business Expansion and Profitability Enhancement [Click e-Stock]

2Q "Surprise Earnings"... Profitability Improves Led by LNG Carriers
Expectations Rise for Expansion of Commercial Ship and Warship Businesses Amid Korea-US Tariff Negotiations

There are growing expectations that Hanwha Ocean's performance will continue to soar. This is due to the steadily rising operating profit margin in the commercial ship sector, as well as the increasing possibility of expanding its commercial ship and warship businesses with the United States.

On July 30, NH Investment & Securities raised Hanwha Ocean's target stock price by 13.6% to 125,000 won, maintaining its "Buy" recommendation. The previous day's closing price was 96,800 won. This decision reflects both the company's second-quarter "surprise earnings" that exceeded expectations and its promising growth potential going forward.

In the second quarter of this year, Hanwha Ocean posted consolidated sales of 3.2941 trillion won and operating profit of 371.7 billion won. Compared to the same period last year, sales increased by 30.4%, and the company turned to profit in terms of operating income. Both figures also rose sharply from the previous quarter, with sales up 43.7%, far surpassing market consensus, which had forecast sales of 3.2498 trillion won and operating profit of 267.6 billion won.

Even excluding favorable exchange rates and one-off gains of 50 billion won, the commercial ship division's profitability was higher than expected. Most low-margin vessels have already been delivered, and the current won-dollar exchange rate is higher than at the time of order, leading to improved profitability, especially for LNG carriers. Productivity improvements and stabilization of major costs also contributed.

Stable results are expected to continue in the future. As of the end of last month, Hanwha Ocean had already secured orders worth $3.22 billion. This month, the company won orders for VLCCs (Very Large Crude Carriers) and icebreaking research vessels, and is close to securing a series of large container ship orders. The total order intake for this year is expected to reach $9 billion. If orders for LNG carriers and offshore plants materialize in the second half of the year, the upward trend is likely to accelerate further.

The fact that the shipbuilding industry is being discussed as a key card in tariff negotiations with the United States is also considered a positive factor. Hanwha Group has already secured a certain amount of assets in the United States through active investment. Jeong Yeonseung, an analyst at NH Investment & Securities, explained, "After the announcement of the tariff negotiation results, there is a high possibility of expanding the commercial ship and warship businesses. Considering this potential for business expansion, further increases in the company's valuation are also possible."