"HD Hyundai Marine Solution: Land-Based Power Generation Engine MRO to Become a Growth Inflection Point" [Click e-Stock]

HD Hyundai Marine Solution Target Price Raised to 320,000 Won

On September 15, Korea Investment & Securities announced that it is maintaining its 'Buy' rating on HD Hyundai Marine Solution, raising the target price by 23.1% to 3.2 million won, citing that maintenance, repair, and overhaul (MRO) services for land-based power generation engines will represent a major inflection point for the company’s future growth.

Korea Investment & Securities projects that sales from HD Hyundai Marine Solution’s land-based power generation engines will increase to 4.8 trillion won by 2059, driven by the expansion of related production facilities at HD Hyundai Heavy Industries. The company explained that this figure is based on operating the Ulsan and Yeongam plants at 80% capacity, with cumulative delivery and installation of 5,936 engines between 2028 and 2059 under long-term service agreements (LTSA) providing the foundation for MRO sales. This estimate is considered conservative as it assumes no increase in service pricing.

The value of the land-based power generation engine MRO business is estimated at 3.4154 trillion won. Breaking this down, the value comprises 2.5155 trillion won attributed to the H54GV (HD Hyundai Heavy Industries’ proprietary HiMSEN gas engine for land-based power generation), which is projected to grow to a cumulative delivery of 3,339 units by 2059, starting from the fourth quarter of 2028; and 899.8 billion won for the HiMSEN H35/40GV (Hyundai Heavy Industries’ proprietary gas engine model), expected to reach a cumulative 2,597 units by 2058, starting from early 2028. These estimates assume an 80% operating rate for the Ulsan and Yeongam plants and a 40% MRO operating margin.

Korea Investment & Securities calculated the fair corporate value, including the MRO value derived using discounted cash flow (DCF) methodology, at 14.3903 trillion won. The target share price was derived by dividing this corporate value by the number of shares outstanding.

Kang Kyung-tae, research analyst at Korea Investment & Securities, stated, “We expect the establishment of dedicated MRO organizations for land-based power generation engines in the United States and other key strategic bases,” citing the fact that the business itself is likely to deliver performance that will surpass the company’s current scale and profitability. He added, “Given that the company also has its sights set on the more specialized field of operation and maintenance (O&M), in addition to MRO, it should remain open to establishing new subsidiaries or business units, or even considering equity investment in specialized O&M firms.” He further noted, “The company’s growth potential, which has previously relied solely on the possibility of a net-zero framework resolution, is now entering a new phase.”

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