[Click eStock] "Hyundai Mipo Dockyard Raises Profit Forecast... Investment Opinion Remains 'Neutral'"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained a neutral investment rating on Hyundai Mipo Dockyard on the 11th and raised the target price by 16% to 58,000 KRW.

Jung Dong-ik, a researcher at KB Securities, said, "We have raised the forecast for controlling net profit for this year and next year by 2.3% and 5.9%, respectively, compared to the previous forecast," adding, "This reflects changes in the risk-free interest rate and perpetual growth rate due to market interest rate fluctuations. The investment rating remains neutral as it secures an upside potential of 1.2% compared to the closing price."

The stock price of Hyundai Mipo Dockyard has risen about 32% since last month, significantly outperforming the KOSPI returns. This is interpreted as a result of a combination of factors including improvement in the industry such as increased new orders and rising new ship prices, as well as exchange rate increases and rising international oil prices. The KRW-USD exchange rate rose from 1,088 KRW at the end of last year to the 1,140 KRW range, and international oil prices have also exceeded the $60 mark. The Clarkson new shipbuilding price index rose from 125.6 points at the end of last year to around 128 points this month.

Hyundai Mipo Dockyard's cumulative new orders from January to February amounted to $992 million, achieving about 28.3% of the annual order target. This figure is more than three times higher than the same period last year, with orders including 6 CONRO ships, 6 LPG carriers, and 2 PC ships by ship type. Researcher Jung Dong-ik estimated, "The order backlog based on sales is also expected to have increased from $3.08 billion at the end of last year to $3.85 billion at the end of February this year," adding, "This is expected to be about 1.45 times the projected sales for this year."

Hyundai Mipo Dockyard's expected sales for the first quarter of this year are 715.2 billion KRW, and operating profit is expected to be 17.2 billion KRW, down 8% and 48% respectively from the same period last year, but still expected to exceed market expectations. Although sales are expected to decline due to reduced workload from a decrease in order backlog, the impact is expected to be partially offset by the rising exchange rate. Researcher Jung Dong-ik explained, "Most of the new orders in the first quarter are LPG carriers and CONRO ships, so there will be no provision for construction loss reserves on the new orders."

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