Daehan Shipbuilding Draws Attention with Gas Carriers and US Navy Vessels... Target Price Lowered [Click e-Stock]

KB Securities Maintains Buy Rating

On June 24, KB Securities announced that it has revised its target price for Daehan Shipbuilding downward by 18.2%, from 110,000 won to 90,000 won. However, the company maintained its 'Buy' investment rating, noting that despite the recent decline in share price, there remains a potential upside of 55.7% compared to the closing price of 57,800 won on June 22.

KB Securities analyst Jeong Dongik explained, "We lowered the target price to reflect adjustments to earnings estimates, as well as changes in valuation metrics such as return on equity (ROE), beta, and perpetual growth rate." He analyzed that although the target price was lowered, the recent sharp drop in the share price has actually increased the upside potential.

For the second quarter of 2026, Daehan Shipbuilding's sales are estimated at 324.9 billion won and operating profit at 90.2 billion won, representing year-on-year increases of 9.7% and 44.4%, respectively. The operating margin is expected to be 27.8%. Both sales and operating profit are projected to be slightly below the consensus (the average forecast of securities firms), but the differences are not significant, so the impact of the earnings on the share price is seen as limited.

Analyst Jeong noted, "Productivity continues to improve due to repeated production focused on Suezmax-class oil tankers," attributing this to a combination of higher shipbuilding prices, stabilized steel prices, and a stronger exchange rate. He also estimated that the temporary work stoppage caused by a major industrial accident in the first quarter was fully recovered in the second quarter.

New orders are also continuing their upward trend. Since the beginning of the year, Daehan Shipbuilding has secured orders for 15 Suezmax-class oil tankers, and as of May, the total order amount has reached 1.9783 trillion won. The order price per vessel has increased by 9.2%, from 85.99 million dollars at the start of the year to 93.90 million dollars recently; in terms of won, the price has risen 12.3%, from 12.59 billion won to 14.14 billion won. By securing 1.5 years' worth of production capacity ahead of schedule, the company has significantly expanded its order backlog. Analyst Jeong forecast that "future additional orders are expected to be selectively accepted based on profitability."

In addition, Daehan Shipbuilding received basic conceptual design certification for an 88K-class very large gas carrier (VLGC) from both Lloyd's Register and the Korean Register earlier this month. On June 5, the company was also selected as a beneficiary of the 'Global Competitiveness Enhancement Support Project for Small and Medium Shipbuilders’ Naval Vessel MRO,' organized by the Defense Acquisition Program Administration and others.

Analyst Jeong added, "It is a critical time to monitor whether Daehan Shipbuilding can expand its business scope beyond its traditional strength in oil tankers to include gas carriers and MRO for US Navy vessels."

This content was produced with the assistance of AI translation services.