NH Investment & Securities analyzed that the order cycle, which started in 2021, continues this year, leading to an increase in performance estimates for HD Hyundai Heavy Industries. Consequently, the investment opinion remains "buy" and the target stock price was raised by 36% to 340,000 won. On the previous trading day, HD Hyundai Heavy Industries closed at 287,500 won.
Jeong Yeon-seung, a researcher at NH Investment & Securities, noted, "We raised the estimated operating profit for HD Hyundai Heavy Industries from 2025 to 2027 by an average of 5%." He explained that this adjustment was based on productivity improvements in the shipbuilding institutional sector and adjustments to exchange rate estimates, taking into account the tight supply of large engines for vessels to enhance profitability in the engine institutional sector.
According to NH Investment & Securities, HD Hyundai Heavy Industries exceeded its order guidance of approximately $9.53 billion for 2024. As a result, the fourth-quarter performance for 2024 is expected to surpass market forecasts, with sales projected to increase by 20.8% year-on-year to 4.12 trillion won, and operating profit expected to rise by 98.0% to 274.6 billion won.
Researcher Jeong stated, "Sales are expected to increase due to a rise in the number of business days in the fourth quarter of last year and an increase in exchange rates, while the rise in shipbuilding prices and cost control are projected to improve profitability." He added, "A one-time cost recovery due to a drop in plate prices is also anticipated."
Additionally, Researcher Jeong forecasted, "Given the expected strength in LNG ship orders due to the expansion of liquefied natural gas development centered around the U.S., container ship orders are projected to exceed expectations." He predicted that orders from container ship operators will proceed again, based on better-than-expected freight rates, sufficient financial capacity, responses to environmental regulation, and expansion of market share.