[Click eStock] Korea Shipbuilding & Offshore Engineering, Samho Shipbuilding's IPO Faces Challenges

[Asia Economy Reporter Junho Hwang] Daishin Securities downgraded its investment rating on Korea Shipbuilding & Offshore Engineering to Marketperform on the 8th and also lowered the target price to 90,000 KRW.

Daishin Securities made this decision reflecting the intermediate holding company discount due to the listing of a key subsidiary, although Korea Shipbuilding & Offshore Engineering is expected to benefit from the recovery in the industry.

Korea Shipbuilding & Offshore Engineering's sales in the fourth quarter of last year were 4.4561 trillion KRW, a 25% increase compared to the previous year, exceeding market expectations. However, it recorded an operating loss of 696.7 billion KRW. The market had anticipated an operating loss of -45.2 billion KRW, but the results were at an earnings shock level.

The operating loss appears to reflect provisions for the lawsuit on ordinary wages amounting to 687.2 billion KRW (587.5 billion KRW in operating expenses), 96.6 billion KRW for wage system restructuring, and other losses of 72.8 billion KRW.

Researcher Dongheon Lee of Daishin Securities analyzed, "Although the increased order backlog and rising ship prices from this year are expected to initiate a trend of performance improvement, the additional dilution due to the planned listing of Hyundai Samho Heavy Industries remains a challenge."

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