[Click eStock] "HD Hyundai Heavy Industries: Earnings Up on Mipo Merger and Naval Orders"

Target Price Raised to 7.8 Million Won

On January 19, DS Investment & Securities announced that it is raising its future earnings estimates for HD Hyundai Heavy Industries, reflecting the effects of the merger with HD Hyundai Mipo and the contribution of HD Hyundai Vietnam Shipbuilding (HVS) to performance.

Kim Daeseong, a researcher at DS Investment & Securities, maintained a "Buy" rating on HD Hyundai Heavy Industries and raised the target price to 7.8 million won in a report released on this day. Kim explained, "Since the dock at HD Hyundai Mipo will be used for building special-purpose vessels in the future, it is reasonable to maintain the premium previously assigned." He further stated, "With Huntington Ingalls, a partner company, confirmed as the primary shipbuilder for the U.S. Navy's next-generation frigate program, the passage of related legislation would significantly increase the likelihood of block orders. Additional re-rating is also possible, given the intention to select a second yard within the United States."

For the fourth quarter of 2025, HD Hyundai Heavy Industries is expected to post strong results, with sales of 4.8 trillion won (a 21.6% increase year-on-year) and operating profit of 669.6 billion won (a 137.3% increase year-on-year). Kim noted, "The fourth quarter earnings estimate only reflects HD Hyundai Mipo's results for December, so the consolidated figures are not fully reflected in the market consensus." He emphasized that, rather than making a simple comparison, attention should be paid to the improved vessel price mix and favorable exchange rate effects. In the shipbuilding division, which accounts for 70% of sales, the proportion of high-value orders from 2023 to 2024 has expanded to 74%, and the favorable exchange rate of 1,321 won per dollar at the time of order is expected to further drive profitability.

Confidence in securing naval vessel orders, as indicated by this year's order targets, is also seen as a positive. HD Hyundai Heavy Industries has set this year's shipbuilding order target at 14.5 billion dollars, with an aggressive target of 3 billion dollars for the special-purpose vessel segment-three times higher than the previous year. Kim pointed out, "Given the secured pipeline, including patrol vessels for the Philippines, frigates for Thailand, submarines and icebreakers for Peru, and the company's conservative order-taking approach, this target also factors in the potential for block orders of U.S. naval vessels." The offshore plant division is also expected to easily achieve orders for two FPSO units bound for the Middle East within the year, driven by high expectations.