Hanwha Ocean Expected to Benefit Mid- to Long-Term from Increased U.S. Defense Spending [Click e-Stock]

Securing Multiple Order Pipelines Beyond the United States

There are forecasts that Hanwha Ocean's performance will improve over the mid- to long-term. This outlook is attributed to the company securing multiple order pipelines in countries such as Thailand, Estonia, and the Middle East, amid growing expectations fueled by increased U.S. defense spending.

On January 16, Daishin Securities raised its target price for Hanwha Ocean by 12.5% to 180,000 won, maintaining a 'buy' recommendation based on these factors. The previous day's closing price was 148,900 won.

For the fourth quarter of last year, the company is estimated to have posted sales of 3.4051 trillion won and an operating profit of 343.8 billion won. Compared to the same period last year, sales are expected to rise by 4.7%, while operating profit is projected to surge by 103.4%. However, these figures are about 11.9% lower than the market consensus of 385 billion won.

The profit margin for the merchant ship division stood at 12.4%, with LNG carriers-classified as high value-added vessels-accounting for more than 70% of the total. While the company is expected to maintain a stable double-digit profit margin, increased fixed costs in the offshore business division are likely to partially erode profits. One-off costs also rose due to higher performance bonuses. With the decision to pay the same bonuses to both direct employees and partner company employees, labor costs are expected to increase.

Lee Jini, a researcher at Daishin Securities, stated, "Hanwha Ocean, which has a tangible presence in the United States, stands to benefit the most at a time when expectations for increased U.S. defense spending are rising. In addition to the United States, the company also has several order pipelines, including follow-up frigates for Thailand, offshore patrol vessels for Estonia, and four submarines for the Middle East."