IBK Securities reported on October 28 that Hanwha Ocean's third-quarter performance met expectations, confirming the strong profitability of its shipping sector. However, due to adjustments in exchange rate forecasts, the firm lowered its target price from 120,000 won to 90,000 won, a 25% decrease. The investment rating remains 'buy.'
Jang Seong-ho, a researcher at IBK Securities, noted that Hanwha Ocean's third-quarter revenue reached 3.4139 trillion won, with an operating profit of 485.7 billion won, marking increases of 12.9% and 67.6%, respectively, compared to the same period last year. Although these figures represent declines of 37.3% and 34.0% from the previous quarter, they align with initial expectations.
Despite a reduction in working days and a stronger won, the shipping sector's robust profitability supported the results. The energy plant sector also reflected contract adjustments amounting to approximately 50 billion to 60 billion won, resulting in an overall operating profit margin of 14.2%. In contrast, the special ship sector faced increased losses due to fixed cost burdens and rising project costs.
IBK Securities particularly highlighted that the operating profit margin for the shipping sector reached 17.4%. Although the revenue share from liquefied natural gas (LNG) carriers began to decline and external conditions were unfavorable, the company maintained high profitability, demonstrating production efficiency and cost control capabilities.
However, a decrease in the revenue share from LNG carriers is expected next year. The share, which was about 70% in the first half of this year, is projected to decline, making improvements in shipyard production efficiency a key factor for defending performance.
IBK Securities forecasts Hanwha Ocean's revenue for this year at 15.608 trillion won and operating profit at 1.995 trillion won. For next year, it estimates revenue at 13.743 trillion won and operating profit at 1.785 trillion won, representing declines of 11.9% and 10.5%, respectively.
The target price reduction is based on a revised long-term exchange rate assumption, lowered from 1,450 won to 1,400 won. Consequently, earnings estimates for 2027-2028 have also been adjusted downward.
Nonetheless, with anticipated expansions in LNG liquefaction plants and increased orders for carriers, particularly in the United States, the long-term growth outlook remains intact.
Jang stated, "In a situation where we must endure a decrease in LNG carrier revenue share by 2027, improvements in shipyard production efficiency will be a major variable for defending performance. If the revenue share from LNG carriers expands again in the future, it will provide a foundation for continued performance improvement without the impact of exchange rates."
* This article has been translated by AI.
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