[Click eStock] "HD Hyundai Marine Solutions, Surprising Earnings for 2 Consecutive Quarters... Target Price Up"

On the 24th, KB Securities raised the target price of HD Hyundai Marine Solutions to 160,000 KRW, maintaining a 'Buy' rating, citing two consecutive quarters of earnings surprises.

The consolidated sales for the third quarter increased by 28.6% year-on-year to 461.3 billion KRW, and operating profit rose by 66.1% to 83.4 billion KRW. The operating profit margin was recorded at 18.1%.

Researcher Jeong Dong-ik stated, "Both sales and operating profit significantly exceeded consensus estimates, marking record-high quarterly sales and operating profit. Although the Digital Solutions segment was somewhat sluggish, sales in the highly profitable AM Solutions and eco-friendly solutions segments increased substantially."

He added, "Accordingly, excluding bunkering, the core business sales for the third quarter surged 30.7% year-on-year to 280.1 billion KRW, with an operating profit margin of 29.6%."

Researcher Jeong explained, "The size of the captive market is expanding due to an increase in newbuild deliveries. The cumulative number of serviced vessels, which was 6,601 in 2020, rose to 9,103 by the end of the third quarter this year."

The increase in long-term service agreements (LTSA) has also enhanced earnings reliability. The LTSA backlog, which was around 155 million USD at the end of last year, nearly doubled to 292 million USD by the end of the third quarter this year.

Researcher Jeong mentioned dividend investment, saying, "HD Hyundai Marine Solutions promised a dividend payout ratio of 50-70% to the market since its listing, and the management reaffirmed this during the conference call."

He further explained, "Considering better-than-expected earnings and an interim dividend of 450 KRW, the year-end dividend is estimated to be around 3,000 KRW per share. This represents about 2.4% based on today's closing price, and given that only about two months remain in the year, the annualized yield exceeds 14%."

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