iM Securities assessed that HD Hyundai Heavy Industries has achieved a 'big surprise' with its first-quarter operating profit being 65.1% higher than market expectations (consensus). The target stock price has been raised to 518,000 won, and the investment opinion has been maintained as 'buy.'
HD Hyundai Heavy Industries recorded a revenue of 3.8225 trillion won in the first quarter of this year, which aligns with the consensus level. However, the operating profit was 433.7 billion won, exceeding the market consensus of 262.7 billion won by 65.1%, and surpassing iM Securities' consensus of 331.9 billion won by 30.7%.
Researcher Byeon Yong-jin from iM Securities noted, 'Excluding exchange rate effects and one-time revenues, the operating profit declines somewhat, but it remains an impressive figure.' He added, 'The company cited improved overall productivity, including foreign workers who have been employed for over a year, but this is such a favorable reason that it could raise some skepticism.'
It has been 15 years since HD Hyundai Heavy Industries recorded an operating profit margin of over 10% in a quarter, which last occurred in 2011 during a shipbuilding boom when the company's average operating profit margin was 12.1%, with a maximum of 16.6%.
In the first quarter of this year, ships ordered in 2022 accounted for about 80% of sales. However, the Clarkson ship price index has risen by 22.6% compared to January 2022, and since the likelihood of increased raw material costs such as plate prices is low, it is expected that most of the increase in ship prices will be reflected in the performance.
Researcher Byeon stated, 'HD Hyundai Heavy Industries is showing the most outstanding performance among the three major shipbuilders, with a significant amount of orders and expectations for benefits from upcoming U.S. Navy ship orders.' He noted that 'the improving domestic and international environment includes U.S. interest in special ships, requests for cooperation in the shipbuilding industry, and active sanctions against competitors in China.'