[Click eStock] Korea Shipbuilding & Offshore Engineering, Mid- to Long-Term Renewable Growth Stock

[Asia Economy Reporter Lee Seon-ae] Daishin Securities evaluated Korea Shipbuilding & Offshore Engineering as a renewable growth stock in the mid to long term, although the short-term listing of its subsidiaries is a burden factor. The investment opinion 'Buy' was maintained, but the target price was lowered from the previous 180,000 KRW to 150,000 KRW.

The target price was calculated by applying a price-to-book ratio (PBR) of 1.0 times to the average book value per share (BPS) for 2021 and 2022. Lee Dong-heon, a researcher at Daishin Securities, explained, "We expect benefits from the recovery of the industry, and as the world's number one shipbuilding group, it will lead the market's eco-friendly innovation. However, we reflected a mid-level holding company discount due to the listing of subsidiaries."

The subsidiary Hyundai Heavy Industries is scheduled to be listed on the KOSPI on the 17th. Korea Shipbuilding & Offshore Engineering is a subsidiary of Hyundai Heavy Industries Holdings and serves as the intermediate holding company for the shipbuilding sector. Among the subsidiaries, Hyundai Mipo Dockyard is already listed, and Hyundai Heavy Industries is scheduled to be listed this year, with Hyundai Samho Heavy Industries planned for next year. This implies that the value reflection range of unlisted subsidiaries may decrease.

However, in the mid to long term, it is expected to play a control tower role by leading research and development, mergers and acquisitions, and renewable energy businesses in the shipbuilding and offshore sectors. A re-rating is anticipated when new businesses become visible.

The researcher stated, "Looking at the group's future growth plans, Korea Shipbuilding & Offshore Engineering is expected to play roles in research and development, investment, and mergers and acquisitions in the hydrogen business value chain, including eco-friendly transport vessels, eco-friendly propulsion vessels, autonomous navigation, smart ships, offshore wind power + water electrolysis, and more."

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