Kang Kyung-tae, a researcher at Korea Investment & Securities, said on the 4th that HD Hyundai Heavy Industries posted results in the third quarter (July–September) that beat market expectations, powered by high profitability in merchant ships and engines.
Kang kept a buy rating on HD Hyundai Heavy Industries and raised the target price 10.6% to 730,000 won from 660,000 won. That is 20.2% above the previous day's close of 607,000 won for HD Hyundai Heavy Industries.
HD Hyundai Heavy Industries reported, on a consolidation basis, third-quarter revenue of 4.4179 trillion won and operating profit of 557.3 billion won. Those rose 22.4% and 170.3%, respectively, from a year earlier. Operating profit beat the market consensus by about 13.8%.
Kang said the merchant ship institutional sector overcame the off-season as shipyard productivity improved and the share of vessels with higher prices increased. Kang said, "HD Hyundai Heavy Industries improved construction efficiency through collaboration with Palantir, and the operating margin of engine machinery, which entered the 20% range (operating profit ÷ revenue), also had a positive effect."
Kang also expected HD Hyundai Heavy Industries and HD Hyundai Mipo to see positive effects, citing the ability to secure work in the global warship market, including the United States.
HD Hyundai Heavy Industries agreed to cooperate with Huntington Ingalls Industries, Inc. (HII) in the next-generation logistics support ship (NGLS) area and is pursuing Peru's next-generation submarine project and the Philippines' frigate project.