On the 8th, Yuanta Securities Korea maintained its opinion to expand its stake in the Korean shipbuilding industry despite the recent stock price drop. This is due to the expectation of naval power recovery following the passage of President Trump's key policy, the "One Big Beautiful Bill" (OBBBA), which will inevitably rely on cooperation with domestic shipbuilders.
Kim Yong-min, a researcher at Yuanta Securities Korea, assessed that factors for stock price increases remain in relation to U.S. Navy defense industries in the second half. The destroyers and nuclear submarines mentioned in the OBBBA are representative ship types with significant delivery delays, indicating that cooperation with Korean shipbuilders is necessary to meet the current deadlines.
According to Yuanta Securities Korea, the budget for shipbuilding under "strengthening the Ministry of National Defense's shipbuilding resources" within the OBBBA has increased by $29 billion compared to the previous budget. The most significant increase includes additional procurement budgets for two destroyers and one nuclear submarine. It is reported that the mentioned destroyers face a maximum delivery delay of 38 months and the nuclear submarine has a maximum delivery delay of 36 months.
Researcher Kim noted, "The budget this time, which has increased by about 8% from the existing 10-year shipbuilding expense of the U.S. Navy, shows a clear commitment of the Trump administration to recover naval power," adding, "However, the long-term goal of improving self-sufficiency conflicts with the short-term limitations of currently not being able to meet delivery deadlines." He forecasted that cooperation with Korean shipbuilders would progress in the second half.
However, the possibility of full-ship contracts is seen as very limited. This is because the Trump administration is focusing on rebuilding its own shipbuilding industry.
Researcher Kim said, "The stock price drop last week was caused by ▲ the potential increase in plate prices leading to long-term profitability declines ▲ short-term adjustments due to recent stock price rises ▲ and the lack of momentum (upward force) for LNG ship orders," adding, "The surge in short selling transaction volumes following last week's announcement of HD Korea Shipbuilding & Offshore Engineering's exchange bond (EB) issuance and the stock price adjustment present a buying opportunity."