[Market Focus] Hanwha Engine Surpasses 100% Operation Rate in 5 Years... Secures LNG Carrier Engine Market with World-First Technology

Shares of Hanwha Engine, a company specializing in ship engine manufacturing, are showing strong performance. The stock is being influenced by news that the company has successfully produced the world's first X-DF engine-a next-generation eco-friendly dual-fuel engine capable of LNG co-combustion-featuring a variable compression ratio (VCR) compressor for LNG carriers. Expectations are rising that this will further accelerate the decarbonization transition in the shipbuilding industry. Following its world-first commercialization of dual-fuel engine production in 2013, Hanwha Engine has once again solidified its leading position in eco-friendly engine technology.

As of 2:15 p.m. on August 29, Hanwha Engine was trading at 47,800 won, up 6,950 won (17.01%) from the previous trading day.

Hanwha Engine held a "World's First X-DF Engine with VCR Production Commemoration Event" at its Changwon headquarters, officially announcing the first shipment of the 5X72DF-2.2 engine equipped with VCR technology. The VCR technology, developed by engine designer WinGD after more than a decade of technical validation, has been applied to an LNG carrier for the first time. The engine will be installed on a vessel for the Qatar Project, one of the world's largest LNG transportation projects, which is being built by Samsung Heavy Industries.

With this production, Hanwha Engine has proactively responded to the demands of global shipowners. The company has already secured orders for approximately 70 VCR-equipped engines worth about 700 billion won, demonstrating strong market demand.

Yoo Moonki, CEO of Hanwha Engine, stated, "The world's first production of VCR-equipped engines for LNG carriers is more than just a technical achievement; it is a milestone that will accelerate the shipbuilding industry's transition to eco-friendliness."

According to Hanwha Engine's semiannual report, the ship engine and diesel power generation division recorded an operation rate of 104.2% in the first half of this year. This is the first time in five years that Hanwha Engine's operation rate has exceeded 100%. After being only 60% in 2021, the rate surpassed 100% for the first time this year.

Exceeding a 100% operation rate means that actual working hours have increased due to overtime, such as work on holidays or at night, beyond regular working hours. The shipbuilding industry views this as a benefit from the tightening of global environmental regulations. The International Maritime Organization (IMO) will begin measuring the greenhouse gas intensity of ship fuels starting in 2027 and will impose a carbon tax based on fuel type and emissions from 2028.

Um Kyunga, a researcher at Shin Young Securities, commented on Hanwha Engine, "We expect the company to achieve a double-digit operating margin faster than the average of its peers in the finished shipbuilding sector," adding, "Facility investments to secure mid- to long-term production capacity are expected to continue through the third quarter of next year."