Shinhan Investment & Securities on the 30th said growth is expected for Sejin Heavy Industries as domestic shipbuilders expand their order backlogs. It initiated coverage with a "Buy" rating and a target price of 20,200 won. The previous trading day's closing price for Sejin Heavy Industries was 17,100 won.
Sejin Heavy Industries is a specialized manufacturer of shipbuilding and offshore equipment, producing related structures such as liquefied natural gas (LNG) and liquefied petroleum gas (LPG) tanks and supplying them to domestic shipbuilders and the plant industry.
Lee Ji-han, an analyst at Shinhan Investment & Securities, projected Sejin Heavy Industries' revenue this year at 451.8 billion won and operating profit at 92.2 billion won. Lee added that because domestic shipbuilders have built up order backlogs for three years, the likelihood of Sejin Heavy Industries' earnings growth is also high.
The analyst said, "Sejin Heavy Industries is the only domestic company and also No. 1 in global market share (MS) among independent gas-tank makers," adding, "Growth is expected on the back of increased orders for gas carriers." The analyst added, "We judge that growth is secured based on shipbuilders' three years of order backlogs going forward."
The analyst added that Sejin Heavy Industries' order uncertainty is low, making it highly likely to benefit. The analyst said, "It handles all outsourced LPG tank volumes for HD Hyundai's shipbuilding group," adding, "Sejin Heavy Industries' order uncertainty is low."
An increased share of high value-added products is also a driver of earnings improvement. The analyst said, "Through Sejin Heavy Industries' monopolistic market position and future mix upgrades in high value-added areas such as liquefied carbon dioxide carriers (LCO2) and LNG bunkering vessels (BV), both the average selling price and sales volume will increase."