Yuanta Securities Korea on the 14th said HD Hyndai Marine Solution(443060) is expected to benefit from parent company HD Hyundai Heavy Industries(329180)'s expansion of high-output power generation engines. It maintained a "buy" (BUY) recommendation and raised the target price to 448,000 won from 412,000 won. The previous session's closing price was 247,000 won.
HD Hyundai Heavy Industries on the 10th announced via a filing an investment of 833.6 billion won, including land expenses. Aiming for completion in May 2028, it will build a dedicated plant for 3 GW of high-output Himsen power generation engines at a new factory and, including 1 GW at HD Hyundai Engine, plans to secure annual production capacity of 4 GW for land-based power generation engines by 2030.
Kim Yong-min, an analyst at Yuanta Securities Korea, said, "Since the factory expansion filing, HD Hyundai Heavy Industries' share price has risen 3.3%, while HD Hyndai Marine Solution's has climbed 17.3%, advancing by a wider margin."
Kim cited the aftermarket (AM) business's unrivaled structural advantages as the reason HD Hyndai Marine Solution's share price has climbed more steeply despite the parent company's factory expansion. For HD Hyundai Heavy Industries, original equipment manufacturer (OEM) revenue and profit will be reflected starting in 2030, whereas HD Hyndai Marine Solution will begin to fully recognize AM revenue and profit from 2032 to 2033 as operating engine volume (UIO) increases.
Kim added, "A strength of AM that differentiates it from OEM is that the profit curve steepens as operating engine volume accumulates each year," noting, "Even with a conservative valuation, the company's AM business value for land-based power generation engines arising from the new 4 GW of production capacity alone is about 5.5 trillion won."
Kim continued, "There is a relative weakness in that the profit recognition timing is 2 to 3 years later than OEM and dispersed into medium- to long-term profits, but from a medium- to long-term investment perspective, the one-and-only AM business model is the key basis that enables a re-rating of corporate value," adding, "It is the biggest beneficiary in the domestic shipbuilding sector for power generation engines bound for artificial intelligence data centers (AIDC)."