Hanwha Ocean Achieves 23% Shipbuilding Margin in "Surprise Earnings," Poised for Further Growth [Click eStock]

2Q Operating Profit Doubles Year-on-Year

Merchant Ship Division’s Margin Hits Record 23%

"Middle East Energy Supply Chain Shifts Offer Structural Tailwinds"

Hanwha Ocean delivered a surprise performance in the shipbuilding segment in the second quarter of this year, recording an operating profit margin of 23%. The shift in energy supply chains resulting from geopolitical risks in the Middle East is also seen as favorable for the shipbuilding industry, leading to assessments that long-term momentum has been secured.

On the 28th, Hana Securities maintained its target price for Hanwha Ocean at KRW 175,000 and reiterated its "Buy" rating, citing these factors. The previous day's closing price was KRW 88,800.

The primary reason for this positive outlook is the strong results recorded in the second quarter of this year. Revenue reached KRW 5.4432 trillion, and operating profit was KRW 736.1 billion, marking increases of 65.2% and 101.7%, respectively, compared to the same period last year. These results far exceeded market consensus, delivering a significant earnings surprise.

The main driver of performance improvement was the commercial ship segment. Revenues from liquefied natural gas (LNG) carriers ordered since 2024 have begun to be fully reflected, pushing the profit margin to 22.7%, up 4.7 percentage points from the previous quarter. Large-scale construction projects, including FSRUs (floating storage and regasification units) and 24,000-TEU-class container ships, are also accelerating, supporting continued growth.

The energy plant segment also contributed to the strong results. KRW 1.5 trillion of offshore project volume, recognized upon delivery, was reflected in the second quarter. With the completion of delivery for the P79 FPSO (floating production, storage, and offloading unit), the energy plant segment turned profitable.

The special-purpose ship segment is still operating at a loss, primarily due to marketing and fixed costs. However, cost saving efforts have narrowed the deficit. Hana Securities noted that while fixed costs remain a burden for the special-purpose ship and energy plant segments in the second half of the year, the potential for design and order changes (C/O) and additional incentives could help support a solid profit trend.

From a mid- to long-term perspective, changes in the energy supply chain are also favorable for the shipbuilding industry. As geopolitical conflicts in the Middle East drag on, diversification of energy supply chains is underway. This is expected to lead to higher ton-miles for gas carriers and tankers, as well as expansion in resource development projects.

Jaeseon Yoo, a researcher at Hana Securities, said, "Order intake is increasing, with a focus on very large crude carriers (VLCCs), and selective orders are being won at above-market prices. While the special-purpose ship segment did not deliver positive results on major submarine projects, growing defense industry demand in Asia, the Middle East, Europe, and Africa means there is ample potential to secure new growth drivers."

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