[Click e-Stock] "HD Hyundai Mipo Shows Faster-Than-Expected Earnings Growth... Target Price Raised"

On November 4, DB Securities raised its target price for HD Hyundai Mipo to 300,000 won, maintaining a 'Buy' investment rating, stating that "the company is showing faster-than-expected earnings growth."

In the third quarter, HD Hyundai Mipo reported sales of 1.3 trillion won and operating profit of 200.8 billion won (an operating margin of 15.4%), representing year-on-year increases of 20.7% and 470.5%, respectively, and exceeding market consensus. Excluding one-off gains of 45.8 billion won, recurring profit was a solid 154.7 billion won. Seo Jaeho, a researcher at DB Securities, explained, "Productivity improvements and a higher proportion of LPG carriers in orders since 2024 have been the main drivers of improved profitability." In the second half of the year, the proportion of LPG carriers is expected to rise to around 25%, and from 2026 onward, the full-scale construction of LNG BV vessels is projected to further enhance profitability.

He noted, "This is the phase where the proportion of high-margin, high-priced vessel types is increasing and profitability improvements from cost reductions are most evident," adding, "The upward trend in earnings is expected to continue through 2027."

The company's continued stable order intake is also seen as a positive. Cumulative orders reached 2.2 billion dollars (33 vessels) by the third quarter of this year, achieving 55% of the annual target of 3.8 billion dollars. Researcher Seo commented, "Although there has been a slowdown in new orders due to decreased demand in the mid-sized vessel segment, this is interpreted as a short-term digestion period following concentrated orders in 2023 and 2024." He added, "Given the potential benefits from regulations targeting China and expectations for the opening of the LNG BV market, the company's selective order-taking strategy is likely to continue." Positive momentum is also being sustained by the expansion of its Vietnamese shipyard subsidiary and expectations for new orders from the U.S. strategic fleet.

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