[Click eStock] "Daewoo Shipbuilding & Marine Engineering, Rapid New Performance... Turnaround in the Second Half"

[Asia Economy Reporter Kwon Jaehee] Hana Financial Investment maintained a 'Buy' rating on Daewoo Shipbuilding & Marine Engineering (DSME) on the 10th, setting a target price of 33,000 KRW.

Although the fourth-quarter results last year fell short of market expectations, DSME achieved new orders of 12 vessels worth 2.72 billion USD as of the end of January this year, recording a faster pace compared to the previous year.

DSME posted sales of 1.3557 trillion KRW in the fourth quarter of last year, a 41.3% increase from the previous quarter. This was due to an increase in operating days leading to higher production volume and a favorable exchange rate. Additionally, changes in working conditions due to the spread of COVID-19 and weather factors such as rain in the previous quarter acted as base effects.

During the same period, operating loss was 515.4 billion KRW, with the deficit widening compared to the previous quarter. While the scale grew significantly and some drillship valuation gains were reflected due to rising oil prices, profits decreased due to the recognition of one-time provisions.

Yoo Jae-sun, a researcher at Hana Financial Investment, analyzed, "Due to recent raw material price increases, it is estimated that the expected steel price for the first half of this year was raised, and provisions were proactively set for increased outsourcing costs due to higher production volume. Excluding these factors, the results appear to meet expectations."

DSME currently holds a backlog of orders exceeding three years, raising expectations for a turnaround in the second half of this year.

Researcher Yoo stated, "Sales performance is expected to recover fully this year after bottoming out in 2021, and growth in scale is certain through 2023. While awaiting the outcomes of key issues such as steel price negotiations in the first half and economic sanctions on Russia, attention should be paid to the mid- to long-term performance improvement trend driven by steep ship price increases."

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