Increased Orders from 'Keunson' Shipowners... Hyundai Mipo Dockyard Expected to Benefit Greatly

Increase in Ship Orders Due to Won Strength... LNG Ship Growth Especially Favorable

Provided by Hyundai Mipo Dockyard

[Asia Economy Reporter Minwoo Lee] Greek shipowners, major players in the shipping industry, are expected to increase their investments in liquefied natural gas (LNG) and liquefied petroleum gas (LPG) powered vessels, which is anticipated to benefit Hyundai Mipo Dockyard.

On the 13th, Hana Financial Investment raised Hyundai Mipo Dockyard's target stock price by about 16.7% to 70,000 KRW and maintained a 'Buy' rating, citing this background. The previous trading day's closing price was 47,550 KRW.

Researcher Muhyun Park of Hana Financial Investment analyzed that freight rate information is lagging data, so market conditions and outlook must be considered. Park stated, "The primary source of profits for Greek shipowners dominating the shipping industry is first ship trading, followed by cargo trading carried on the ships," emphasizing, "The freight rate information we know is merely lagging data resulting from cargo trading by major European shipowners." When Greek shipowners increase investments in secondhand vessels, freight rates rise the following year, and as freight rates increase, Greek shipowners present a bright outlook and have shown a pattern of selling secondhand vessels to Asian shipping companies. This means Greek shipowners do not predict freight rates but rather create market conditions and outlooks."

Although it can be retrospectively inferred that Greek shipowners increased secondhand vessel investments last year due to rising freight rates, they have actually been reducing such investments since 2018. This is because of practical port entry bans on open-type scrubber-installed vessels, engine damage caused by the use of low-sulfur fuel oil, and increasingly stringent environmental regulations in the shipping industry, leaving no reason to invest further in secondhand vessels. Therefore, forecasting the shipping industry or discussing shipbuilding market conditions based on freight rates is meaningless. Park predicted, "Now that sea freight rates are rising, Greek shipowners are likely flooding the market with secondhand vessels," adding, "Asian shipping company officials are probably overwhelmed trying to absorb the flood of secondhand vessel offerings."

Attention should be paid to exchange rates and demand, according to the analysis. The decline in oil prices has increased demand for tanker ships, and despite the resurgence of COVID-19, domestic shipyards are increasing ship orders. It is explained that the sharp depreciation of the Korean won since February led to a sharp decline in orders in the first half of the year, while the won's appreciation starting in October has been driving an increase in ship orders.

In the mid to long term, demand for LNG/LPG-powered vessels is expected to drive an increase in ship orders. In particular, with shipowners increasing investments in LPG-powered vessels, Hyundai Mipo Dockyard is expected to benefit significantly. Researcher Park forecasted, "Hyundai Mipo Dockyard plans to deliver its first LPG-powered vessel in June next year," adding, "Following this, similar to the surge in MR tanker orders in the second half of 2013, LPG-powered vessel order performance is expected to increase substantially."

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