[Click eStock] "Hyundai Mipo Dockyard Secures Financial Stability to Withstand Recession"

[Asia Economy Reporter Eunmo Koo] KB Securities evaluated Hyundai Mipo Dockyard as having secured financial stability to withstand the recession despite severe domestic and international conditions. The investment rating was downgraded from 'Buy' to 'Neutral,' and the target price was lowered from the previous 38,500 KRW to 34,000 KRW.

According to KB Securities on the 27th, the total ship orders received by shipbuilders worldwide until April amounted to 3.82 million CGT (Compensated Gross Tons), a 61.6% decrease compared to the same period last year. In terms of the number of vessels, it decreased by 55.9%, and in terms of value, it dropped by 65.2%. Researcher Dong-ik Jung of KB Securities stated in the report, "This is judged to be the result of a combination of factors such as the expansion of economic uncertainty due to the spread of COVID-19 and movement restrictions," adding, "This market downturn could pose a more significant threat to Hyundai Mipo Dockyard, which has an absolutely insufficient order backlog."

Hyundai Mipo Dockyard's new orders in the first quarter of this year recorded 550 million USD, which is 15.0% of the business plan. The number of vessels was 14, all petrochemical product carriers (PC vessels). Due to the base effect from poor orders last year, first-quarter orders increased by 25.8% compared to the same period last year, but the absolute volume remains insufficient. As first-quarter new orders fell short of sales, the order backlog based on sales decreased by 3.1% from 3.27 billion USD at the end of last year to 3.17 billion USD at the end of March, which is 1.3 times (15.8 months) the sales of last year.

Despite the stock price rebound since mid-March, the price-to-book ratio (PBR) based on this year's expected performance stands at about 0.58, indicating that valuation pressure (stock price level relative to performance) is not significant. Researcher Jung explained, "Although the domestic and international conditions surrounding the shipbuilding industry are severe, the stable operating profit and a net cash position of 349.4 billion KRW as of the end of the first quarter, along with being the only shipbuilding stock to pay dividends, demonstrate a stable financial structure, which is a strength."

This content was produced with the assistance of AI translation services.