Strong Shipbuilding Performance Continues in 3Q... Rising Expectations for MASGA [Click e-Stock]
by Lee Minwoo
Published 21 Oct.2025 08:21(KST)
Solid Results Despite Off-Season... Higher Share of High-Priced Vessels and Favorable Exchange Rate Effect
Continued Optimism for Benefits from U.S. Shipbuilding Reconstruction Project
The third-quarter earnings of major domestic shipbuilders are expected to maintain their momentum for profit improvement, despite the seasonal off-peak period. As participation by Korean shipbuilders is essential for the U.S. shipbuilding reconstruction (MASGA) project, expectations for domestic shipbuilders are anticipated to rise as more concrete plans are revealed.
On October 21, Kiwoom Securities maintained its "overweight" investment rating on the shipbuilding sector, citing these factors. The company expects the profit improvement trend to continue as the proportion of revenue from high-priced vessels ordered between 2023 and 2024 increases. Additionally, the momentum from U.S.-driven LNG carrier orders is expected to accelerate from next year, leading to robust new ship orders. The prospect of expanded cooperation with the United States in areas such as naval vessels and maintenance, repair, and operations (MRO) was also highlighted as a major positive factor.
Strong Performance Despite Summer Off-Season
Kiwoom Securities also predicted that third-quarter results would be solid. Despite the off-season, when the number of working days declines due to summer vacations, the overall profit momentum is expected to be sustained by the increased proportion of revenue from high-priced commercial vessels and strong performance in business divisions other than commercial vessels. In particular, the HD Hyundai Group is expected to minimize the decline in sales during the summer vacation period by deploying some foreign personnel to operations.
Lee Hangyeol, a researcher at Kiwoom Securities, explained, "All major domestic shipbuilders completed wage negotiations smoothly in the first half of the year, so one-off costs will be reflected this quarter. However, the positive impact of the rising won-dollar exchange rate is also present, so overall, the companies are expected to deliver strong results in line with market expectations."
According to Kiwoom Securities' forecasts for third-quarter results: HD Hyundai Heavy Industries is expected to post sales of 4.2068 trillion won and operating profit of 508.3 billion won, up 16.6% and 146.6%, respectively, from the same period last year. HD Hyundai Mipo Dockyard is projected to report sales of 1.2194 trillion won and operating profit of 119.6 billion won, representing increases of 13.2% and 239.1%, respectively, year-on-year. Hanwha Ocean is expected to achieve sales of 3.1901 trillion won (up 18.0%) and operating profit of 332.9 billion won, a remarkable 1,201.7% increase. Samsung Heavy Industries is also forecast to deliver strong results, with sales of 2.6186 trillion won (up 12.7%) and operating profit of 219.3 billion won (up 82.9%).
Expectations for Expanded U.S. Orders... MASGA Project Benefits to Grow
As of September this year, global new ship orders totaled approximately 326 million CGT (compensated gross tonnage), a 47% decrease from the same period last year. Nevertheless, Korean shipbuilders are expected to easily achieve their order targets for the year, thanks to U.S. sanctions on Chinese shipbuilding and increased orders for eco-friendly vessels. In the commercial vessel sector, the HD Hyundai Shipbuilding Group and Samsung Heavy Industries have both achieved more than 70% of their annual order targets. Hanwha Ocean is expected to surpass last year's total order value this year. Orders for U.S.-origin LNG carriers, which were expected to resume this year, are now anticipated to accelerate from next year.
Participation by Korean shipbuilders is essential for the U.S. MASGA project, which aims to counter China's naval power. Korea has already agreed with the United States to establish a $150 billion investment fund for the MASGA project. However, details such as investment methods and funding sources still require negotiation. Full-scale discussions are expected to take place at the Asia-Pacific Economic Cooperation (APEC) summit at the end of this month. Researcher Lee noted, "Major domestic shipbuilders are considering various options, including investing in U.S. shipyards and signing memorandums of understanding (MOUs) with U.S. shipyards. Beginning as early as the end of this year, legislation related to the construction of U.S. naval vessels may be enacted, and naval shipbuilding and MRO projects are also highly likely to expand in earnest."
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