[Click e-Stock] "Hanwha Ocean: Defense Earnings Are Essential for a Share Price Rally"

There is a view that successful defense-sector investment in the United States is essential for Hanwha Ocean's share price to rise.

On the 5th, Yuanta Securities researcher Kim Yongmin reiterated a Buy rating on Hanwha Ocean and maintained his target price of 179,000 won, stating this outlook.

Hanwha Ocean announced its results for the fourth quarter of last year, including operating profit of 189 billion won, and he explained that, excluding one-off costs, the results were in line with consensus. Researcher Kim said, "If we exclude one-off costs of minus 230 billion won related to bonuses and labor costs, minus 20 billion won in SG&A expenses related to special-purpose vessels for Canada, minus 30 billion won related to domestic defense capacity expansion, workforce additions, and operation losses, minus 20 billion won in unsettled payments for special-purpose vessels, plus 60 billion won from FPSO change orders, and plus 23 billion won from foreign exchange effects, the total one-off amount is minus 217 billion won, and the actual operating profit comes to 406 billion won."

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He went on to say that while the strength in the merchant ship division is expected to continue this year, expectations for the defense business are the most important factor for a share price rally. Researcher Kim said, "The rising revenue contribution from high-priced tankers and container ships ordered after 2024 is supporting higher margins, and, paradoxically, because order intake in 2023 was weak after the company changed its name, the revenue share from last year's order volume has surged sharply since 2024," adding, "Nothing has yet been finalized regarding defense-sector investment in the United States, but the company is waiting for the market environment and institutional conditions, and this event is a prerequisite for the stock to move higher."

He said, "There is no change in our view resulting from the quarterly earnings announcement," and added, "What we still need to wait for is entry into the U.S. defense market via executive orders under a Trump administration, the domestic MASGA fund, and progress in the nuclear-powered submarine project at the Subic Shipyard in the Philippines."

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