[Click eStock] "After Hanwha Group Integration, Taking a Breather... Hanwha Ocean, Investment Opinion 'Buy'"

Shinhan Investment Corp. on the 22nd upgraded its investment opinion on Hanwha Ocean from Trading BUY to BUY, stating, "The vague expectations following Hanwha's acquisition in the first half of last year were resolved through a rights offering in the second half." The target price was maintained at 26,000 KRW. The closing price on the previous day was 22,150 KRW.

Perspective view of the WTIV being constructed by Hanwha Ocean [Image source=Yonhap News]

On the same day, Lee Dong-heon, a research fellow at Shinhan Investment Corp., said, "It is considered a breathing period after being incorporated into the Hanwha Group. The latent growth potential is significant," he added.

Last year's fourth-quarter performance showed sales of 2.2309 trillion KRW, a 54% increase compared to the same period the previous year. Operating loss was 48.8 billion KRW, a reduction from the 416.1 billion KRW loss in Q4 2022. Sales met market expectations, but operating profit turned negative. There was a temporary profit in Q3 last year, but it reverted to a loss again.

Looking at sales, there was a balanced recovery with 1.7888 trillion KRW (+59%) in merchant ships, 285.2 billion KRW (+50%) in special ships, and 264.7 billion KRW (+65%) in offshore sectors. The volume of construction increased, and the proportion of liquefied natural gas (LNG) carriers expanded. The increase in foreign workforce also aided the production process. Operating profit included stabilization costs of 220 billion KRW (140 billion KRW for merchant ships, 80 billion KRW for offshore). There was a reversal of 53 billion KRW in special ships.

The order backlog stood at 24.5 trillion KRW based on year-end sales, securing 3.3 years of workload. The research fellow explained, "Orders in 2021 and 2022 already reached 21 billion USD, and although last year's orders were only 3.5 billion USD, it is not a big issue. Due to a profitability-focused selective order policy, the '2024 order guidance' was not announced."

He added, "It is a breathing period after incorporation into the group," noting, "Although the order pace is slower compared to competitors, negotiations for more than 12 Qatar LNG carriers are in the final stages, and inquiries for very large ammonia carriers (VLAC) and very large crude carriers (VLCC) have increased. The order recovery speed until the end of the year needs to be monitored."

The research fellow said, "The latent growth potential is significant. Special ships are expanding business domestically and overseas in Thailand, the Philippines, Canada, Poland, etc. Experience and competitiveness related to offshore remain strong. Acquisition of overseas bases within the year is also expected." However, he noted, "Uncertainty regarding the handling of ARC7 vessels and the absence of sales guidance are somewhat disappointing."

He stated, "There are various points such as domestic and international special ships, overseas base investments, synergy with HSD Engine, and the eco-friendly strategies of other group companies," adding, "For now, it is a 'Hanwha adaptation period for shipbuilding' to confirm the foundation of orders and performance."

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