DS Investment & Securities said on the 28th that Daehan Shipbuilding is expected to be re-rated amid a boom in tankers, and that its operating margin in the third quarter of this year topped 24%, the highest level in the industry.
It also newly set a target price of 92,000 won with a "buy" rating. The previous trading day, Daehan Shipbuilding closed at 67,300 won.
Researcher Kim Dae-seong at DS Investment & Securities said, "There is a high possibility that the tanker market will enter a boom phase centered on large ships (VLCC and Suezmax)," and "Daehan Shipbuilding is expected to expand its order competitiveness and market share in Suezmax-class tankers, its main ship type."
DS Investment & Securities presented next year's estimated revenue and operating profit for Daehan Shipbuilding at 1.3 trillion won and 331 billion won. These represent increases of 7.9% and 19.3%, respectively, from a year earlier. It projected that the sales share of the ultra-high-priced orders won last year will expand from 19% this year to 64% next year.
DS Investment & Securities also viewed Daehan Shipbuilding's 12-month forward price-earnings ratio (PER) at around 9 times, saying it remains clearly undervalued compared with other shipbuilders.
Kim said, "There is an overhang risk, as about 10.7 million shares could hit the market with the lock-up expiration in Feb. next year, and the perception that mid- to long-term top-line growth is uncertain due to a single portfolio concentrated in tankers is a risk."
He added, "Given the current valuation, some of the overhang risk is already priced in, and the valuation gap with other shipbuilders will gradually narrow," and "It is also positive that the company plans to introduce a dividends policy based on ample cash going forward."