"Hanwha Ocean Raises Earnings Outlook and Target Price... Merchant Ship Division Profit Up" [Click e-Stock]

Sangsangin Securities maintained its "Buy" investment rating on Hanwha Ocean on April 29 and raised its target price to 180,000 won.

Lee Seoyeon, a research analyst at Sangsangin Securities, stated, "We have raised our earnings forecast and increased the target price to 180,000 won, taking into account improved productivity and a better sales mix." Specifically, Lee explained that accelerated ship delivery adjustments driven by increased merchant ship productivity are the main factors behind higher profitability. "This year, the proportion of 2022 orders, which accounted for more than half of last year's revenue, will decrease, while the share of post-2024 orders is expected to rise to the 70% range, leading to further improvement in the sales mix," Lee said.

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Regarding the special ship division, Lee noted that there is a fixed cost burden due to a short-term order gap. However, Lee added, "If Hanwha Ocean is selected as the preferred bidder for overseas naval vessel exports to countries such as Canada and Peru, which are scheduled to be announced after the first half of this year, and if Hanwha Ocean is confirmed for the domestic Korean next-generation destroyer (KDDX) project, these developments will help reduce the cost burden and have a positive impact on the share price."

Meanwhile, Hanwha Ocean’s consolidated results for the first quarter of this year recorded sales of 3.2099 trillion won and operating profit of 441.1 billion won, exceeding market expectations by 15%. Lee explained that the merchant ship division posted sales of 2.7945 trillion won and operating profit of 502.1 billion won, offsetting the underperformance of other divisions.

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