[Click eStock] "HD Hyundai Heavy Industries, Growth Visibility Up on Order Backlog... Target Price Raised"

IBK Investment & Securities Sets Target Price of 8.4 Million Won for HD Hyundai Heavy Industries

On September 15, IBK Investment & Securities initiated coverage on HD Hyundai Heavy Industries, citing strong growth potential based on its order backlog, with a target price set at 8.4 million won and an investment opinion of 'Buy'.

Jang Seongho, a researcher at IBK Investment & Securities, stated, "Based on its existing order book, the company now has strong earnings growth visibility through 2028. Demand for LPG carriers and the HiMSEN engine—its medium-speed power generation engine brand—is already translating into new orders," adding, "Although the company has already exceeded its annual order targets for commercial ships and engines this year, there remains ample room for additional orders." This constituted the reasoning for his 'Buy' recommendation.

Due to the closure of the Strait of Hormuz, US LPG cargos are currently being routed to Asia via the Cape of Good Hope. As a result, freight rates have surged and orders for Very Large Gas Carriers (VLGCs) have also remained strong. Given that this upcycle was triggered by supply chain disruptions caused by war, there are predictions that if the Strait of Hormuz reopens, this exceptional situation will come to an end.

However, IBK Investment & Securities maintains that the cycle could be prolonged even if the supply chain disruptions are resolved. Researcher Jang explained, "This is because US LPG imports are increasing in Asian countries such as India and China, and structural congestion at the Panama Canal is driving up the frequency of Cape of Good Hope routing for VLGGs."

The company also expects demand from US data centers for HiMSEN engines to grow further. The expansion of data centers requires stable power supply, and the HiMSEN engine is already a proven power source. In the US, concerns have even been raised about the possibility of electricity shortages next year due to rising demand for data centers, which has led to a trend where installing independent power generation facilities is becoming more common to address power bottlenecks.

Researcher Jang reaffirmed, "US energy infrastructure companies have already chosen HiMSEN engines as the power source for their data centers, and once a power source is adopted, demand for it is expected to continue to grow."

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