[Click eStock] "Hanwha Ocean Still at the Forefront of U.S. Naval Orders... Target Price Maintained at 160,000 Won"

DS Investment & Securities: "Earnings Growth Expected This Year"

On January 12, DS Investment & Securities maintained its "Buy" rating and target price of 160,000 won for Hanwha Ocean, stating that the company is expected to see earnings growth this year due to rising prices for liquefied natural gas (LNG) carriers and the impact of offshore plant orders.

Kim Daesung, a researcher at DS Investment & Securities, explained in a report released that day, "The price of LNG carriers reflected in this year's sales is expected to rise from 240 million dollars in the fourth quarter of 2025 to 246 million dollars in the fourth quarter of 2026." Although the proportion of LNG carrier sales is projected to decrease to the 40% range in the second half of the year (52% in the third quarter, 44% in the fourth quarter), he assessed that the increase in ship prices and the effects of repeated construction would more than offset this decline.

For offshore plants, several large FPSO (Floating Production, Storage, and Offloading) projects, such as Petrobras's P-86 and P-91 and TotalEnergies' Venus Project, are scheduled to be awarded in the first half of the year. Kim predicted, "Even if only one of these projects is secured, the burden of fixed costs will be eased, and the turnaround to profitability in the offshore plant segment will be brought forward to the fourth quarter of this year."

The key variable expected to drive a re-rating of Hanwha Ocean's corporate value is whether the company secures overseas naval vessel projects. This year, orders for surface vessels for Thailand and Estonia, as well as the selection of a preferred bidder for Canada's 60 trillion won submarine program, are scheduled. In particular, since former U.S. President Donald Trump's announcement of the "Golden Fleet" in December last year, the prospects for orders from the United States have increased significantly. Kim emphasized, "Given that Austal USA specializes in next-generation naval vessel construction and the Philly Shipyard is actively expanding its infrastructure, Hanwha Ocean remains at the forefront of securing U.S. naval vessel orders."

Kim forecast that Hanwha Ocean's earnings in the fourth quarter of 2025 will record sales of 3.3 trillion won (a 0.7% increase year-on-year) and operating profit of 363 billion won (a 114.8% increase year-on-year, with an operating margin of 11.1%), falling short of the market consensus for operating profit (399 billion won) by 9%. This is due to performance bonuses for 2025 being paid to partner companies at the same rate, an increase in one-off costs related to employees, and continued losses in the offshore plant segment. However, thanks to the high contract exchange rate (1,324 won) and a high proportion of LNG carrier sales (78%), the merchant ship segment is expected to achieve operating profit of 357 billion won (a 212% increase year-on-year, with an operating margin of 13.2%).