DS Investment & Securities said on the 30th that for Daehan Shipbuilding, first-quarter results, order intake, and shareholder return policy are all progressing positively this year. It kept its investment opinion at Buy and raised the target price to 131,000 won from 123,000 won. The previous trading day's closing price of Daehan Shipbuilding was 90,200 won.
Kim Dae-sung, an analyst at DS Investment & Securities, said, "Despite a major industrial accident in the first quarter, the ordinary operating margin hit a record high," and noted, "With Suezmax prices rising and the benefits of repeat builds continuing, while the revenue proportion of low-margin shuttle tankers gradually declines, profitability should keep improving."
Daehan Shipbuilding posted revenue of 308.3 billion won and operating profit of 82.6 billion won in the first quarter. Revenue rose 0.2% from a year earlier, and operating profit increased 18.4%. Considering a one-off gain tied to execution budgeting in the fourth quarter of last year and a one-off expense of about 3 billion won related to a major accident in the first quarter of this year, the ordinary operating margin climbed to 27.8% from the prior quarter.
It also projected additional revenue growth as dock (a facility that allows newly built ships to be launched into the sea) turnover improves.
Daehan Shipbuilding has recently improved process efficiency, pushing dock turnover from 4.5 weeks to 4.2 weeks now, moving toward the 4.0-week target. If it reaches the target, analysis suggests production capacity (CAPA) could expand from 11 ships (Suezmax basis) to 12 starting in 2028.
Orders are also solid. This year it secured orders for 13 Suezmaxes ($1.15 billion), already achieving its annual order target.
Kim said, "With a hefty 3.5 years of backlog secured, it should be possible to pursue a selective order strategy for premium-priced ships at $90 million or more for the added slots."
Meanwhile, Daehan Shipbuilding resolved a shareholder return policy worth about 49.6 billion won at the recent shareholders meeting. Specifically, it consists of a 40 billion won share buyback and cancellation and 9.6 billion won in cash dividends. It plans to cancel all shares acquired on June 8 next month, marking the second such shareholder return program among domestic shipbuilders.
Kim added, "Profit growth is expected through higher dock turnover and diversification of ship types," and said, "We also see ample potential for an additional rerating, depending on the possibility of raising shareholder returns further on the back of improving results."