Thought They Only Built Ships... "Target Price at 1 Million Won" as Leading Shipbuilder Rides Power Demand Boom [Click e-Stock]

Expansion of Engine Orders for Data Centers

Ample Production Capacity... Expectations for Entry into High Value-Added Businesses Grow

HD Hyundai Heavy Industries Yard Panorama

HD Hyundai Heavy Industries is expected to maintain its status as the leading stock in the shipbuilding industry. This outlook is based on the company's expansion from its core shipbuilding business to securing orders for power engines, thereby adding new areas of high value-added business.

On August 20, Shin Young Securities raised its target price for HD Hyundai Heavy Industries by 33.3% to 1 million won and maintained a 'Buy' investment rating, citing these factors. The previous day's closing price was 474,000 won.

The key factors are engines and production capacity. The Engine Division of HD Hyundai Heavy Industries recently secured additional orders for power generation engines for land-based data centers, following similar orders in April. The total value of power generation engine orders secured for land-based projects to date stands at around 1.6 trillion won. As demand for electricity rises due to the expansion of artificial intelligence (AI) data centers, the engine business of shipbuilders is emerging as a new growth driver.

Ample ship production capacity is also cited as a strength. Since the merger with the HD Hyundai Mipo shipyard, there has been increased dock availability in the mid-sized vessel division, along with the reactivation of previously idle docks at HD Hyundai Heavy Industries. This positions the company as the shipbuilder with the highest production capacity. This is expected to provide an advantage in future competition for high value-added ships, offshore platforms, and special project orders.

Performance improvement is appearing rapidly as well. In the second quarter of this year, HD Hyundai Heavy Industries recorded revenue of 6.3322 trillion won and operating profit of 1.0399 trillion won. This represents year-on-year increases of 52.7% and 120.6%, respectively. While part of this is due to the base effect of the HD Hyundai Mipo merger, rising profit margins in non-shipbuilding segments such as offshore and engine machinery are also driving overall performance improvement.

Annual performance forecasts for this year are also strong. Shin Young Securities estimates HD Hyundai Heavy Industries' revenue in 2026 at 24.237 trillion won and operating profit at 3.9821 trillion won. This would represent growth of 37.9% and 95.4%, respectively, over the previous year. Operating margin is also expected to improve from 11.6% last year to 16.4% this year, 19.6% in 2027, and 21.6% in 2028. Growing earnings are raising expectations for increased shareholder returns, such as higher dividends.

The growth of the engine machinery division is also noteworthy. Shin Young Securities projects engine machinery revenue will increase from 3.7319 trillion won this year to 4.4797 trillion won in 2027 and 5.1516 trillion won in 2028. During the same period, engine machinery operating profit is estimated to rise from 929.5 billion won to 1.206 trillion won and 1.4998 trillion won.

Analyst Um Kyung-Ah commented, "HD Hyundai Heavy Industries can always provide electricity for ships, and still has ample capacity for offshore platform construction. The company is uniquely flexible in securing newly emerging high value-added orders in the market. The merger synergies are just beginning, yet performance has already improved significantly, and there is still room for further growth in both scale and profitability."

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