[Click eStock] "HSD Engine, 1 to 2 Years to Reach 1 Trillion Won in Sales... Target Price Up"

[Asia Economy Reporter Oh Joo-yeon] Hana Financial Investment forecasted that HSD Engine's sales performance will reach the level of 1 trillion won within the next 1 to 2 years. Even though various ship fuels such as liquefied natural gas (LNG), liquefied petroleum gas (LPG), methanol, and ethanol are emerging, HSD Engine produces propulsion engines that use all fuels, so performance growth is expected due to increased orders from shipyards.

On the 4th, Hana Financial Investment predicted that HSD Engine's sales this year will be 887.6 billion won, operating profit 25.2 billion won, with an operating profit margin of 2.84%. They also forecasted that in 2021, sales will be 998.9 billion won, operating profit 41.8 billion won, with an operating profit margin of 4.18%. Return on equity (ROE) is estimated to improve from 4.7% in 2020 to 14.1% in 2021.

Researcher Park Moo-hyun explained, "The proportion of contracts equipped with dual-fuel low-speed propulsion engines such as LNG and LPG in Korean shipyards' orders increased from about 10% in 2015-2016 to 45% until October this year," adding, "Currently, contract negotiations underway almost require dual-fuel propulsion ships as a basic specification. Meanwhile, ship fuels are expanding to include methanol and ethanol, showing that changes in ship propulsion engines are evolving."

Researcher Park said, "Even if various ship fuels emerge, HSD Engine produces propulsion engines that use all fuels," and added, "Propulsion engines using alternative fuels are priced 10-15% higher than engines using conventional bunker oil, so additional profitability is expected."

In HSD Engine's cumulative sales performance for the third quarter of this year, the sales proportion of dual-fuel propulsion engines exceeded 40%. As shipyards' orders for dual-fuel propulsion ships increase, the benefits of HSD Engine's performance growth are expected to appear with some time lag.

Researcher Park stated, "HSD Engine's sales performance will reach the level of 1 trillion won within 1 to 2 years," maintaining a 'Buy' investment opinion and raising the target stock price from the previous 9,000 won to 11,000 won.

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