[Click e-Stock] "Daehan Shipbuilding, the Cheapest Among Shipbuilders... Target Price Raised"

Target Price Raised by 29.4% from Previous Level

On the 24th, KB Securities evaluated Daehan Shipbuilding as the cheapest among shipbuilding stocks and raised its target price from 110,000 won to 85,000 won. It maintained its investment rating of "Buy."

Jung Dongik, an analyst at KB Securities, explained, "We are raising the target price by 29.4% compared with the previous level to reflect adjustments to our earnings estimates," adding, "Despite the recent share price rally, the upward revision of the target price still leaves 21.8% upside potential, so we are maintaining our investment rating."

Daehan Shipbuilding recorded the highest profitability among major shipbuilders last year. Jung said, "According to Daehan Shipbuilding's preliminary results for last year, revenue increased 14.2% year-on-year to 1.2281 trillion won, operating profit surged 86% to 294.1 billion won, and the operating margin came in at 23.9%, the highest among major shipbuilders," and analyzed, "This was the result of a combination of factors: productivity has been continuously improving thanks to repetitive production focused on Suezmax-class crude oil tankers, while higher newbuilding prices, stabilizing steel prices at lower levels, and a stronger exchange rate have all contributed." He added that this trend is expected to continue this year, leading to further profitability improvement compared with last year.

The company is also assessed to have secured financial stability. Jung pointed out, "At the end of 2023, Daehan Shipbuilding's debt-to-equity ratio reached 374%, and its net debt stood at as much as 274.9 billion won. However, thanks to improved earnings and proceeds from the paid-in capital increase raised in the process of listing on the Korea Exchange, the debt-to-equity ratio had fallen to 41.3% by the end of 2025, and the company held net cash of 521.8 billion won including short-term financial assets," adding, "As a result, it has completely shaken off concerns over a weak financial structure that used to be almost a stigma for small and mid-sized shipbuilders, secured a high level of financial stability, and created room for research and development (R&D) and investment."

New orders have also continued to come in since the beginning of the year. Daehan Shipbuilding has won orders for a total of eight Suezmax-class crude oil tankers so far this year, bringing its order intake to over 1 trillion won as of the 23rd. Jung said, "Given that its annual production capacity is around 10 to 11 vessels, it has effectively secured 70% to 80% of a full year's workload," and added, "In particular, the company is continuing to win orders at prices higher than the current Clarkson newbuilding price of 86.5 million dollars, which will have a positive impact on its future profitability."