HSD Engine's Order Performance Expected to Grow with Expanded Scrubber Entry Ban

Hana Financial Investment Report
Orders for Dual-Fuel Propulsion Engines Expected to Increase

[Asia Economy Reporter Minji Lee] As the number of countries banning ships equipped with scrubbers increases, there is a growing demand for replacement of new ships using LNG fuel, leading to expectations that HSD Engine's dual-fuel propulsion engine performance will increase. Accordingly, on the 22nd, Hana Financial Investment maintained a buy rating and a target price of 7,000 KRW for HSD Engine.

Recently, Saudi Arabia also banned the entry of ships equipped with open-type scrubbers, resulting in a total of 13 countries and 27 major ports worldwide banning the entry of ships equipped with open-type scrubbers. In Norway, all three types of scrubber-equipped ships are restricted from entry. In the Suez Canal in Egypt, which connects Europe and Asia, fines are imposed when scrubber-equipped ships operate, effectively banning their entry.

Park Muhyun, a researcher at Hana Financial Investment, said, “Scrubbers are not welcomed anywhere in the world,” and added, “The regions and countries banning the entry of scrubber-equipped ships will continue to increase.”

The increase in regions and countries banning the entry of scrubber-equipped ships raises demand for LNG propulsion engines. This is because demand for ships using oil fuel in the charter market will significantly decrease. In Singapore and Fujairah, the world's first and second largest bunkering ports, the entry of ships equipped with open-type scrubbers has been banned since January this year, causing a sharp decline in bunker oil sales.

Researcher Park Muhyun explained, “Among scrubber-equipped ships worldwide, 80% are open-type, 18% are closed-type, and 2% are hybrid-type,” and added, “Since replacement demand for new ships using LNG fuel will increase further, HSD Engine's dual-fuel propulsion engine order performance will also increase.”

He continued, “HSD Engine's return on equity (ROE) is estimated to be 7.5% this year, 13.6% in 2021, and 15.1% in 2022.”

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