[Featured Stock] Chosun 'Big 3' Surge on Record LNG Shipbuilding Contract

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] South Korea's 'Big 3' shipbuilders are surging sharply in early trading, buoyed by the largest-ever liquefied natural gas (LNG) vessel construction contract.

As of 9:06 a.m. on the 2nd, Daewoo Shipbuilding & Marine Engineering (DSME) was trading at 29,700 KRW, up 24.01% (5,750 KRW) from the previous trading day. At the same time, Samsung Heavy Industries and Korea Shipbuilding & Offshore Engineering were also up 22.49% and 12.80%, respectively, compared to the previous day.

On the previous day, Qatar Petroleum (QP), Qatar's state-owned oil company, announced it had signed an LNG carrier contract worth 70 billion Qatari riyals (approximately 23.6 trillion KRW) with the three Korean shipbuilders. The contract secures LNG vessel construction slots through 2027, with QP planning to receive over 100 LNG carriers from the three domestic shipbuilders by 2027.

Qatar has attracted significant attention in the shipbuilding industry by pursuing the world's largest LNG project. As the world's largest LNG producer, Qatar plans to expand its annual LNG production from the current 77 million tons to 126 million tons by 2027 and is pushing forward with expansion projects. The increase in LNG production will lead to large-scale orders for carriers. QP also plans to increase its LNG carrier fleet from 74 vessels to 190 vessels.

The news of this memorandum of understanding with Qatar is expected to continue driving up the stock prices of major shipbuilding companies. Jinmyung Choi, a researcher at NH Investment & Securities, said, "Although shipbuilding stocks have been on an upward trend recently, weak order performance throughout the first half of the year and subdued investor sentiment toward industrial stocks have kept the sector's average price-to-book ratio (PBR) at around 0.6, still undervalued compared to the pre-COVID-19 level of 0.8. With the recent surge in international oil prices and the news of securing Qatar LNG volumes, the sector is expected to continue recovering to pre-pandemic levels."

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