Shipbuilding Stocks Navigate to Data Centers... ETF Returns Also on the Rise

From Engines for AIDC to FDC: New Growth Drivers

Double-Digit ETF Returns Over the Past Week

"Current Valuation Fails to Reflect Full Potential"

The emergence of "Artificial Intelligence (AI) data centers" is bringing a new wave to the shipbuilding industry, driving up the returns of shipbuilding-themed exchange-traded funds (ETFs).

According to ETF Check on August 12, as of the closing price on August 10, the weekly returns (based on net asset value) of shipbuilding ETFs all posted double-digit gains. SOL Shipbuilding TOP3 Plus Leverage came in at 23.34%, KODEX Eco-friendly Shipbuilding & Shipping Active at 12.74%, TIGER Shipbuilding TOP10 at 11.73%, and HANARO Fn Shipbuilding & Shipping at 10.60%. Major holdings of these ETFs include HD Hyundai Heavy Industries, Samsung Heavy Industries, Hanwha Ocean, and HD Korea Shipbuilding & Offshore Engineering.

SOL Shipbuilding Equipment, which invests 100% in shipbuilding equipment stocks, achieved a high weekly return of 15.64%. This ETF invests in companies that manufacture "materials, parts, and equipment" needed for ships, such as engines. HD Hyundai Marine Solution was its largest holding at 25.83%, followed by Hanwha Engine at 17.29%, Korea Carbon at 16.51%, and HD Hyundai Marine Engine at 14.37%.

The most noteworthy sector in shipbuilding recently is "data centers." As demand for AI surges, data centers also need to expand correspondingly, and the realization of floating data centers (FDCs) is expected to address large-scale land, noise, and cooling challenges. While Elon Musk's SpaceX has proposed the "space data center" as a future growth engine, for the shipbuilding industry, FDCs play a similar role. Samsung Heavy Industries is regarded as a strong candidate for winning related orders. In April, it received Approval in Principle (AIP) for basic design from the American Bureau of Shipping and signed basic and detailed design contracts for FDCs with the American company Musterian. Daesung Kim, a researcher at DS Investment & Securities, said, "If full-scale FDC orders begin, a diversified vessel portfolio and expanded profitability can be expected, leaving plenty of room for future re-rating."

In addition, utilizing ship engines as power sources for data centers is rapidly gaining traction. On August 10, HD Hyundai Heavy Industries announced that it had signed a contract to supply a 9.6MW-class HiMSEN engine-based power plant to Coban Energy Group, a U.S. energy infrastructure development company. The contract value is 956 billion won, and when added to the earlier April contract with Aperion Energy Group (valued at 627.1 billion won), the total amount of orders reaches 1.58 trillion won.

Related subsidiaries are also expected to benefit. Yeonseung Jang, a researcher at NH Investment & Securities, noted, "HiMSEN engines for power generation are HD Hyundai's proprietary brand, and high profitability is expected throughout the manufacturing and maintenance process." He continued, "Profitability is even higher than that of existing marine engines for both HD Hyundai Heavy Industries (responsible for manufacturing) and HD Hyundai Marine Solution (responsible for maintenance)." He added, "In terms of maintenance, engines supporting data centers will require replacement parts and servicing at a faster pace than medium-speed marine engines, leading to a stronger and more sustained benefit. Meaningful revenue and profit contributions are expected to begin in 2028."

Despite such growth momentum, the shipbuilding sector is widely considered undervalued. Industry experts point out that, although financial performance is trending upward with a record-breaking profit cycle and fundamentals such as order backlogs are solid, only share prices have declined sharply in the short term. Seung Han Han, a researcher at SK Securities, commented, "With engines for AI data centers, FDCs, and other new growth engines emerging, the current valuation does not fully factor in the stable fundamentals and additional growth potential."

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