[Click eStock] "Hyundai Mipo Dockyard, Timing of Tanker Order Recovery is Key"

Reflecting Costs Related to Ordinary Wage Loss... Operating Profit Expected to Turn Negative in 4Q This Year
Shinhan Financial Investment "Hyundai Mipo Dockyard Target Price Lowered from 100,000 KRW to 90,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Although Hyundai Mipo Dockyard's sales in the fourth quarter of this year are expected to increase, there are predictions that operating profit will turn to a loss due to a defeat in the ordinary wage lawsuit. Next year, the timing of the recovery in tanker orders is expected to be a key factor.

On the 27th, Shinhan Financial Investment estimated Hyundai Mipo Dockyard's Q4 sales to increase by 30.2% from the previous quarter to 806.2 billion KRW, and operating loss to turn to a deficit of 86.4 billion KRW during the same period. While the market consensus for operating profit is a surplus of 23.9 billion KRW, Shinhan Financial Investment expects a loss.

The increase in costs due to the loss in the ordinary wage lawsuit is expected to negatively impact performance. On the 16th of this month, the Supreme Court ruled in favor of the workers in a 630 billion KRW lawsuit filed by workers of Hyundai Heavy Industries and Hyundai Mipo Dockyard demanding unpaid wages from 2009 to 2012. It is anticipated that 100 billion KRW in costs will be reflected in the performance.

This year, orders driven by liquefied petroleum gas (LPG) carriers and feeder vessels are expected to decrease next year due to a high base effect. Shinhan Financial Investment estimated next year's orders for Hyundai Mipo Dockyard to decrease by 22.2% compared to this year, to 3.85 billion USD (approximately 4.5719 trillion KRW).

Although orders for feeder vessels have resumed, tanker orders have not yet recovered. Researcher Hwang Eo-yeon of Shinhan Financial Investment explained, "Tanker shipping companies have continued to incur losses until the third quarter of this year and are still uncertain about the market recovery," adding, "Order resumption is expected after the second quarter of next year."

From the time tanker orders resume, the stock price is also expected to rebound. Researcher Hwang said, "Hyundai Mipo Dockyard has a construction period about six months shorter than other shipbuilders, so it is the fastest to convert orders into sales and see a stock price rebound during the recovery period."

Accordingly, Shinhan Financial Investment maintained its investment opinion of 'Buy' for Hyundai Mipo Dockyard. However, the target price was lowered from 100,000 KRW to 90,000 KRW. The closing price on the 24th was 69,400 KRW.

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