[Click e-Stock] "HD Hyundai Mipo Expected to Expand Defense Business Through Merger... Target Price Raised"

by Song Hwajung

Published 22 Oct.2025 08:09(KST)

Target Price Raised from 2.1 Million Won to 2.7 Million Won

On October 22, Daishin Securities announced that it expects HD Hyundai Mipo to expand its defense business through a merger, raising its target price from 2.1 million won to 2.7 million won. The investment opinion remains 'Buy'.

Lee Jini, a researcher at Daishin Securities, stated, "The merger is expected to broaden the base for defense (naval vessel) business orders," and explained, "Through the merger with HD Hyundai Heavy Industries, HD Hyundai Mipo has set a defense business target of 7 trillion won out of its 32 trillion won sales blueprint for 2030. If two out of HD Hyundai Mipo's four docks are used for special-purpose and defense vessels, the company can construct additional special-purpose ships, which could significantly increase sales per production capacity (CAPA) and facility utilization rates."

The merger date for HD Hyundai Mipo and HD Hyundai Heavy Industries is set for December 1, with a merger ratio of 0.4059146 shares of HD Hyundai Heavy Industries common stock for each share of HD Hyundai Mipo common stock. The special-purpose ships targeted by HD Hyundai Mipo include polar icebreakers, offshore patrol vessels (OPVs), and logistics support vessels. Lee analyzed, "The expansion of defense production capacity is expected to have little impact on the production capacity of the commercial vessel segment," adding, "HD Hyundai Mipo currently builds 45 ships per year, but its actual construction capacity is 70 ships annually, so there is ample room for expansion."

For the third quarter of this year, HD Hyundai Mipo's consolidated sales are projected to increase by 8.5% year-on-year to 1.1693 trillion won, and operating profit is forecast to surge by 264.5% to 128.5 billion won. Lee noted, "Approximately 30 billion won in penalty income from the cancellation of the New Zealand KiwiRail Ro-pax (passenger-cargo) vessel construction contract is expected to be reversed. Excluding this one-off, operating profit is estimated at 98.5 billion won."

Productivity improvements from the introduction of robots are also anticipated. HD Hyundai Mipo Dockyard has become the first in Korea to successfully implement an automated welding system for outdoor processes. Lee explained, "With the adoption of this system, the automation rate for deck welding on PC vessels will increase from the previous 58.6% to around 80%." He further analyzed, "Currently, 14 industrial robots and 23 collaborative robots have been introduced to shipbuilding sites to boost productivity. Especially as price competition with China intensifies, productivity improvements through robotics are expected to bring about a structural change in the domestic shipbuilding industry."