[Click eStock] "Daewoo Shipbuilding & Marine Engineering, Solid Order Performance Despite Market Downturn"

[Asia Economy Reporter Park Jihwan] Shinhan Financial Investment evaluated on the 18th that Daewoo Shipbuilding & Marine Engineering is recording favorable order performance despite the downturn in the order market. Accordingly, it maintained the investment opinion 'Buy' and the target price of 30,000 KRW.

Hwang Eoyeon, a researcher at Shinhan Financial Investment, stated, "Daewoo Shipbuilding & Marine Engineering's 3rd quarter sales amounted to 1.4 trillion KRW, and operating profit was 33.6 billion KRW, down 26.7% and 54.3% respectively compared to the previous year," adding, "This performance is 16.9% below the market expectation of 40.4 billion KRW in operating profit."

The causes of this sales decline were cited as a decrease in operating days, a 2.6% drop in the KRW-USD exchange rate, and the ultra-large crude oil production plant (TCO project), among others.

This year’s order amount is analyzed to be 6.1 billion USD (-11.3%), and the cumulative orders as of November reached 4.0 billion USD, achieving 55.5% of the guidance of 7.2 billion USD. Researcher Hwang explained, "Additional VLCC and container ship orders are expected during the remaining period," and "If the 6.1 billion USD order target is achieved, the order backlog for merchant ships will increase to 10.1 billion USD."

Global order volume is expected to decrease by 53.8%, and order backlog by 33.8%. Despite the global order market downturn caused by COVID-19, relatively favorable results are expected due to major LNG project orders. Daewoo Shipbuilding & Marine Engineering has the highest LNG carrier sales proportion among the top three shipbuilders at 41.6%.

Researcher Hwang said, "Competitors are waiting for orders of Mozambique LNG and Arctic 2 icebreaking LNG carriers this year," and added, "The LNG-related momentum for shipbuilders may continue until the first quarter of next year, when Qatar LNG carrier orders are scheduled."

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