[Click eStock] "Hyundai Mipo Dockyard, Earnings Lower Than Expected but... Expected to Recover the Fastest"

Daishin Securities Report

[Asia Economy Reporter Gong Byung-sun] Daishin Securities lowered the target price for Hyundai Mipo Dockyard from 66,000 KRW to 64,000 KRW on the 8th, stating that the fourth-quarter performance last year fell short of expectations. However, it maintained a 'Buy' rating, expecting the fastest recovery in line with the oil price recovery trend and economic reopening.

Hyundai Mipo Dockyard's sales last year were 658.9 billion KRW, in line with consensus, but it recorded an operating loss of 37.9 billion KRW, turning to a deficit and missing the consensus of 17.9 billion KRW. This is interpreted as reflecting construction loss provisions due to the exchange rate decline and the impact of falling steel prices.

In particular, difficulties in Vietnam appear to have negatively affected the fourth-quarter performance last year. Sales in the Vietnam division were 87 billion KRW, down 33% compared to the same period last year. Operating profit was 3.8 billion KRW, down 29% year-on-year. Analyst Lee Dong-heon of Daishin Securities analyzed, "This is due to the base effect from the additional reflection of delivery vessels in the previous quarter and a decrease in volume."

However, the fastest recovery is expected this year. The analyst said, "Orders for medium-range (MR) tankers, feeder container ships, small and medium-sized liquefied petroleum gas (LPG) ships, and liquefied natural gas (LNG) ships are expected in line with the oil price recovery trend and economic reopening," adding, "Above all, it is the most competitive small and medium-sized shipbuilder in the world."

The volume of orders in the first half of the year is key to a rapid recovery. As of the end of December last year, the backlog based on sales was 3.08 billion USD (approximately 3.4604 trillion KRW), and the order target for this year is set at 3.5 billion USD. The sales target is 3 trillion KRW. The analyst diagnosed, "Typically, the delivery cycle of shipbuilders is about one year, so sales fluctuations will be significant depending on the volume of orders in the first half of the year."

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