[Click e Stocks] "Hanwha Ocean, Profitability Improvement Expected to Continue... Investment Rating Up"
Shinyoung Securities on the 26th upgraded its investment opinion on Hanwha Ocean by two levels from 'sell' to 'buy,' anticipating continued profitability improvement. The target price was maintained at 30,000 KRW.
Researcher Eom Kyung-ah of Shinyoung Securities stated, "Although the target price remains the same, the recent stock price decline has created upside potential," adding, "While stock price volatility is expected during the listing of the paid-in new shares, considering the long-term trend of earnings improvement, there will be downside rigidity."
Hanwha Ocean succeeded in returning to profitability in the third quarter this year after 12 quarters. Hanwha Ocean's Q3 results showed sales of 1.9169 trillion KRW, a 5.3% increase from the previous quarter, and operating profit turned positive at 74.1 billion KRW. Researcher Eom analyzed, "It is true that the one-time gain of 157 billion KRW from winning the drillship arbitration case made an absolute contribution, but cost accounting that could affect future profitability improvement was also accompanied, such as reflecting an estimated cost of 97 billion KRW for the offshore order backlog, which is known to have poor cost control despite being orders since 2020."
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The earnings season in Q4 is expected to be a turning point for performance improvement. Shinyoung Securities forecasts Hanwha Ocean's Q4 sales to increase by 25.2% quarter-on-quarter to 2.3995 trillion KRW, with operating profit at 38.4 billion KRW. Researcher Eom said, "Despite a decrease in operating days compared to the previous quarter, sales increased, confirming that the volume of construction is normally rising," adding, "Q4 has the highest number of operating days in the year, and after delivering low-priced orders, relatively higher-priced orders will be introduced, continuing the trend of profitability improvement."
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