[Click-e Stock] "Daehan Shipbuilding: High-Priced Orders Fully Reflected... Target Price Raised"

Up 33.7% From Previous Target

On the 9th, DS Investment & Securities raised its target price for Daehan Shipbuilding from 92,000 won to 123,000 won, saying that the company is likely to continue stable profit improvement based on its solid fundamentals. It maintained its investment rating of "Buy."

Daehan Shipbuilding's earnings for the fourth quarter of last year came in at 350.4 billion won in revenue, up 5.6% year-on-year, and 95.3 billion won in operating profit, up 36.3%, achieving a record-high operating margin of 27.2%. Operating profit exceeded the consensus (the average of securities firms' forecasts) by 18%.

Kim Daesung, an analyst at DS Investment & Securities, said, "The main factors were the one-off gains reflected because the previously set expected cost was higher than the actual cost, and the improved productivity of Suezmax and Aframax tankers and higher contracted prices reflected in revenue," adding, "The reduction in the number of personnel at partner companies from 2,400 in 2024 to 1,900 in 2025 also led to lower outsourcing costs, which contributed to margin improvement."

In 2026, earnings are expected to improve further as revenue recognition begins for high-priced orders won in 2024. The average contracted price of Suezmax tankers reflected in revenue is projected to rise to 88 million dollars. In addition, full-scale steel cutting for three shuttle tankers is set to begin, and this is expected to drive further margin improvement. Kim commented, "If the current trend of a weak won and strong dollar persists, the operating margin could open up to as high as 30%."

The order backlog situation is also positive. With available dock capacity for about two vessels in 2028 and five to six vessels in 2029, future orders are expected to be booked at a minimum of 88 million dollars or more per vessel, based on Suezmax tankers.

Kim said, "Given that tanker freight rates remain elevated due to geopolitical risks and Daehan Shipbuilding is in a supplier-advantaged position, order intake at prices above the previous peak of 90 million dollars is fully achievable." He added, "The increased cash reserves will be used for shareholder returns such as capital expenditures (CAPEX) to enhance dock efficiency and dividends. The shareholder return policy is expected to be finalized within the first quarter, and depending on its scale, there is room for additional valuation upside."