Korea Investment & Securities Co. on the 23rd maintained a buy recommendation on HD Hyundai Heavy Industries, saying structural growth is expected in the engine institutional sector as it enters the U.S. data center (DC) market, and raised its target price by 24.7% from the previous level to 910,000 won. HD Hyundai Heavy Industries' previous day's closing price was 641,000 won.
Korea Investment & Securities Co. highlighted HD Hyundai Heavy Industries' recent contract to supply 20-megawatt (MW) "HiMSEN" engines with Aperion Energy Group (AEG), a U.S. energy infrastructure company. The analysis said this means the in-house developed medium-speed engine has made a full-fledged entry into the energy infrastructure market on the back of the global artificial intelligence (AI) data center boom.
Kang Kyung-tae, an analyst at Korea Investment & Securities Co., said, "With this order, about 23% of medium-speed engine manufacturing capacity through 2030 has already been allocated," and added, "Given the current production capacity of about 4 million horsepower (HP), considering demand for merchant ships at the three shipbuilders in the group and external orders, there is a high likelihood an expansion investment will be decided in the near term."
Global data center installed capacity is estimated to reach 200 gigawatts (GW) by 2030. In particular, given that stable power supply is critical for data centers, demand for baseload power generation using medium-speed engines is surging.
Korea Investment & Securities Co. also said that the recent decision by global competitor Wartsila to expand production capacity by 35% adds weight to the possibility of capacity expansion at HD Hyundai Heavy Industries.
Kang said, "Considering power generation efficiency and transmission and distribution losses, baseload capacity for data centers is estimated at more than 108 GW," and added, "Even if medium-speed engine power plants handle only 5% of that, 5,389 units of 10 MW gas medium-speed engines would be needed."
Kang added, "If HD Hyundai Heavy Industries decides to invest in a dedicated production line for the H54GV, it would affect results starting in 2028."