"Will It Climb Even Higher?" Target Price Raised to 1.03 Million Won for This Stock [Weekend Money]

1Q Operating Profit Hits 905.4 Billion Won...
Strong Performance in Shipbuilding, Offshore, and Engine Divisions

"Numerous Momentum Drivers Linked to Earnings"
Expectations for Profitability Improvement

"A versatile shipbuilder equipped with merchant ships, warships, and engines."

"Soaring stock price, proven capability, and strong momentum."

The securities industry is witnessing a wave of upward revisions to the target price for HD Hyundai Heavy Industries. This is due to the company’s first-quarter operating profit exceeding market expectations, as well as anticipated business momentum going forward.

According to the securities sector on May 9, Samsung Securities raised its target price for HD Hyundai Heavy Industries from 8.9 million won to 10.3 million won the previous day. This means the company saw an additional upside potential of nearly 50% from the 6.9 million won range on May 7. On the same day, Korea Investment & Securities and SK Securities set new target prices at 9.7 million won each. Kiwoom Securities raised its target to 9.5 million won, Sangsangin Securities to 9.1 million won, and Hana Securities and DS Investment & Securities to 9.0 million won.

The primary driver behind these successive target price upward revisions is the company’s strong performance. Youngsoo Han, a researcher at Samsung Securities, highlighted, “Despite conservative cost recognition and without any one-off gains, the company posted results that exceeded expectations.” In the first quarter, HD Hyundai Heavy Industries recorded revenue of 5.9163 trillion won and operating profit of 905.4 billion won, both surpassing market forecasts. These figures represent year-on-year increases of 54.8% and 108.8%, respectively.

In particular, the profit margins for all business divisions improved compared to both the same period last year and the previous quarter. Seunghan Han, a researcher at SK Securities, noted, “All three divisions—shipbuilding, offshore, and engines—performed well.” He explained that this was the result of multiple factors: the rise in exchange rates, increases in ship prices, improvements in the product mix by ship type, and enhanced productivity, all of which offset the decrease in working days.

Looking ahead, the earnings outlook remains bright. Korea Investment & Securities increased its target price by 6.6% while raising its 2027 and 2028 operating profit estimates by 8.6% and 5.9%, respectively. Kyungtae Kang, a researcher at Korea Investment & Securities, stated, “We raised our estimate for the operating profit margin (OPM) of the mid-sized ships segment by about 4 percentage points. High-profitability MGC (mid-sized gas carriers) are expected to consistently account for over 20% of the mid-sized ship sales mix through 2028, which will continuously improve profitability for this segment.” He added, “We raised the 2028 net income estimate by 6.2%, which translated into a higher target price. There are several major momentum drivers that will directly impact earnings.”

Researcher Han also remarked, “The first-quarter results demonstrate an excellent cost structure. We expect additional profitability improvements as the recognition of revenue from high-priced orders expands going forward.” He pointed to several premium factors: net cash nearing 3.7 trillion won as of the end of the first quarter; the expectation of additional cash inflows if the Gunsan Yard is sold; and the estimation that the company has already secured 60% of last year’s annual new orders so far this year. Considering the average valuation of the industrial sector, there is still ample room for further stock price appreciation even with a conservative approach.

Hangyeol Lee, a researcher at Kiwoom Securities, commented, “The division’s in-house HiMSEN engine, used as a main power source for data centers, will serve as a new growth driver for the engine division.” He also highlighted that “in the second half of this year, the resumption of LNG carrier orders in the merchant ship sector, as well as momentum in U.S. naval ship and Southeast Asian special vessel projects, are points to watch.” On an annual basis, Kiwoom Securities forecasts that HD Hyundai Heavy Industries will post revenue of 24.4631 trillion won and operating profit of 703.2 billion won this year, up 39.1% and 81.8% year-on-year, respectively.

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