[Click eStock] "HD Hyundai Marine Solution Secures Long-Term Growth Engine... Target Price Raised"

On June 18, KB Securities reported that HD Hyundai Marine Solution has secured a long-term growth engine through land-based power generation engines for data centers and raised its target price from the previous 240,000 won to 310,000 won. The investment opinion was maintained at 'Buy'.

Jung Dongik, a researcher at KB Securities, stated, "We have raised the target price by 29.2% compared to the previous estimate," adding, "As demand for land-based 'Himsen Engines' expands for uses such as power supply to artificial intelligence (AI) data centers, the long-term growth potential justifies a premium compared to peers."

HD Hyundai Heavy Industries recently announced that it has signed a contract worth 627.1 billion won to supply engine generators to the United States. It is known that the counterparty plans to use these engine generators to supply power to data centers. In such projects, HD Hyundai Marine Solution is responsible for the initial supply of spare parts, after-sales service (A/S) during the warranty period, supply and replacement of consumables, as well as A/S and maintenance after the warranty period. Researcher Jung commented, "Currently, inquiries for similar purchases are increasing significantly, raising expectations for additional contracts in the future," and further added, "As business opportunities based on high-margin Himsen Engines expand, it is expected to play a positive role not only in mid- to long-term performance but also in terms of valuation."

HD Hyundai Marine Solution's results for the second quarter of this year are expected to fall short of market expectations. Researcher Jung stated, "HD Hyundai Marine Solution's second quarter sales are estimated at 591.7 billion won, up 26.5% year-on-year, and operating profit is estimated at 97.6 billion won, up 17.6%, with sales likely meeting consensus (average securities firm forecast), but operating profit expected to fall short by 9.7%." He explained, "A rise in the exchange rate, increased work volume in the eco-friendly sector, and higher oil prices are estimated to have had a positive impact on second quarter results. However, the impact of the Iran war led to a decrease in supply volume in the bunkering segment, and the increase in revenue from the relatively low-profit eco-friendly segment may have had a negative effect."

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