[Click eStock] "Korea Shipbuilding & Offshore Engineering, EU Merger Review Outcome Is Not a Negative Factor"

Outstanding Order Performance Compared to Competitors
SK Securities "Korea Shipbuilding & Offshore Engineering Target Price Lowered from 150,000 KRW to 120,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Although recent reports from major foreign media suggest that the European Union (EU) authorities may reject the corporate merger review approval for Korean shipbuilding companies, it is expected that this will not have a significant negative impact on Korea Shipbuilding & Offshore Engineering (KSOE). SK Securities' analysis indicates that, regardless of external factors, Korea's order performance will stand out compared to competing countries.

According to SK Securities on the 15th, major foreign media reported that the EU antitrust authorities are preparing to reject the corporate merger review approval for Hyundai Heavy Industries Group and Daewoo Shipbuilding & Marine Engineering. The EU authorities have continuously demanded corrective measures due to concerns over a monopoly in liquefied natural gas carriers (LNGCs) resulting from the merger of the two companies. However, the failure to meet the EU's expectations has been cited as the reason for the rejection of the review.

However, SK Securities' analysis suggests that regardless of the review outcome, it will not act as a negative factor for KSOE. Researcher Yoo Seung-woo of SK Securities stated, "If the approval is denied, the plan to increase capital by 1.5 trillion won to Daewoo Shipbuilding & Marine Engineering will be withdrawn, allowing the company to secure ample liquidity," adding, "This could actually be a positive issue for the stock price."

Order performance is expected to stand out in the future. Korea's year-to-date (YTD) order share this year is 37.6%, trailing behind the largest competitor, China, at 49.1%. However, Korea's order amount per ship is 107 million USD (approximately 125.6 billion KRW), which is twice that of China (51.74 million USD).

Researcher Yoo explained, "Domestic companies have maintained an order strategy focused on high value-added ship types such as LNGCs and liquefied petroleum gas carriers (LPGCs)," and added, "The increased preference for Korean shipbuilders by clients due to delivery delays and ship defects from Chinese shipyards over the past few years is also related to this."

Accordingly, SK Securities maintained its investment opinion of 'Buy' for KSOE but lowered the target price from 150,000 KRW to 120,000 KRW. The closing price on the previous day was 97,200 KRW.

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