SK Securities stated that HD Hyundai Marine Solutions is expected to be a major beneficiary of the expanded production capacity of HD Hyundai Heavy Industries' HiMSEN engines. The firm maintained a 'Buy' rating and a target price of 340,000 won.
Han Seung-han, a researcher at SK Securities, noted, "The key to stock price momentum lies not in short-term performance but in the long-term growth trajectory, which is expanding from a focus on ships to include data centers (DC)." He projected that the after-market (AM) services for land power generation engines, based on the increased production capacity of HD Hyundai Heavy Industries' four-stroke engines, will lead to stable high profitability for HD Hyundai Marine Solutions. The operating profit margin for this business is estimated to be around 50-60%.
He specifically forecasted that maintenance performance would rapidly expand following the full-scale supply of land power generation engines. The 1GW supply from HD Hyundai Engines is expected to begin in 2027-2028, while the 3GW supply from the Ulsan new plant is set to start in the fourth quarter of 2028. Consequently, maintenance revenue and profits are anticipated to significantly increase starting in 2030, three years after delivery.
The shorter maintenance cycle for data center engines compared to ships is also seen as a factor for performance growth. The expected maintenance cycle for data center engines is three years, shorter than the five years for ships, with approximately 30% of engine sales expected to come from maintenance revenue every three years. Assuming a 25-year operational period for data centers, the total maintenance revenue could amount to 2.5 times the engine sales revenue for HD Hyundai Marine Solutions.
SK Securities also expects continued growth in performance. The firm forecasts that HD Hyundai Marine Solutions' operating profit will rise from 415.8 billion won this year to 516.4 billion won in 2027 and 655 billion won in 2028. The operating profit margin is also projected to increase from 17.2% to 18.8% and then to 20.8% during the same period.
Han identified the floating data center (FDC) retrofit business as a new growth driver. With the recent increase in demand for FDCs from hyperscalers, HD Hyundai Marine Solutions is currently in discussions regarding inquiries related to this business. He anticipates that the FDC retrofit business will become a new growth engine in the eco-friendly solutions sector, based on its shorter lead time compared to new builds.
* This article has been translated by AI.
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