DS Investment Securities has raised its target price for Hanwha Ocean from 132,000 won to 145,000 won, reflecting improved profitability in the shipping sector and upward revisions to earnings estimates. The firm maintained its 'buy' rating.
Kim Dae-sung, a researcher at DS Investment Securities, stated, "In the second quarter, sales reached 5.4 trillion won, and operating profit was 736.1 billion won, exceeding previous estimates by 32.9%. The shipping sector achieved an operating profit margin of 22.7%, reaching the highest level in the country without one-off factors, driving overall performance."
He added, "The high profitability in the shipping sector is attributed to the expansion of high-priced vintage cargo to about 70% after 2024, cost reductions from optimized design specifications and diversified supply chains, and favorable exchange rate effects."
Furthermore, he noted that despite the inclusion of marketing costs related to the Canadian Submarine Acquisition Project (CPSP) in the special ship segment, cost-saving measures reduced the loss compared to the previous quarter, while the offshore plant segment turned profitable with 1.5 trillion won in revenue from the P79 project delivery.
Kim projected, "In the second half of the year, the revenue share from LNG carriers will gradually decrease, but the rise in LNG prices and the expansion of high-priced vintage cargo after 2024 will offset this. We expect strong performance to continue, driven by high-priced volumes of Very Large Crude Carriers (VLCC) and container ships."
He also highlighted that the special ship segment has secured a strong order pipeline, including the Estonian Offshore Patrol Vessel (OPV) and Thai frigate, across Africa, Europe, and Asia, enhancing order visibility. Additionally, the offshore plant segment is set to bid for 2-3 floating production, storage, and offloading (FPSO) units in the second half of the year, with customer references boosting order expectations.
Kim expressed optimism about participating in the construction of the maritime missile test measurement vessel (MRIV) ordered by the Philippine shipyard, stating, "We are positioned at the forefront among domestic shipbuilders related to MASGA, leveraging our established presence in the U.S. to recover the premium lost from the Canadian CPSP failure through the division of U.S. naval ship construction and overseas naval orders."
* This article has been translated by AI.
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