[Click eStock] "HD Hanguk Joseon Haeyang, Q3 Earnings Disappoint... Target Price Down"

On the 27th, SK Securities lowered the target price of HD Hyundai Heavy Industries to 135,000 KRW, citing that the company's third-quarter earnings this year would fall short of market expectations. The investment rating of "buy" was maintained.

On the same day, Seunghan Han, a researcher at SK Securities, stated, "HD Hyundai Heavy Industries' third-quarter preliminary consolidated sales amounted to 5.0112 trillion KRW, down 8.1% from the previous quarter. Operating profit was 69 billion KRW, a 3.2% decrease compared to the previous quarter," adding, "Due to fewer operating days compared to the previous quarter, sales in the shipbuilding and engine & machinery segments declined, and operating profit significantly missed the market expectation of 162.1 billion KRW." Net profit recorded 337 billion KRW, greatly exceeding expectations due to a 253 billion KRW corporate tax refund from tax law revisions.

This performance is interpreted as a continued deficit due to fixed costs not being recovered following a decline in sales in the offshore segment, increased costs to compensate for delays in the shipbuilding segment processes, and the absence of a one-time factor of about 40 billion KRW in the engine & machinery segment. The slow pace of improvements aimed at a high-value-added product mix at Hyundai Mipo Dockyard also negatively impacted the sustained deficit, but the profit improvement effect at Hyundai Samho Heavy Industries maintained operating profit at a level similar to the previous quarter, continuing the positive earnings trend.

From a long-term perspective, future earnings are expected to be positive. Researcher Han said, "Hyundai Samho Heavy Industries has a high-priced order sales ratio exceeding 50% (approximately 38% LNGC) from orders secured last year," and added, "It is the fastest among the three companies in earnings improvement and will continue to drive HD Hyundai Heavy Industries' positive earnings trend." He also predicted, "Hyundai Mipo Dockyard will complete the absorption of low-priced orders by the first quarter of next year, and meaningful profit growth is expected from the second quarter."

He further stated, "Although the sales ratio of high-priced orders secured by HD Hyundai Heavy Industries as of the third quarter this year is about 10%, it is expected to expand to about 70% by the second half of next year. The 17 second-phase LNGCs for Qatar are priced about 13% lower than recent newbuilding prices, but sufficient profitability can be secured through repetitive construction effects," adding, "The timing of the full-scale expansion of high-priced construction orders among the shipbuilding subsidiaries varies, but the direction of gradual profit improvement from the second half of this year is the same."

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