By Kwanwoo Jun
South Korean shipbuilders drove the stock benchmark Kospi’s gains Monday on growing expectations for an earnings recovery later in 2023 due to brisk contract wins.
Shares of Hyundai Mipo Dockyard rose 9.7% to close at 76,900 won ($58.03) and those of Daewoo Shipbuilding & Marine Engineering jumped 12% to KRW29,000, outperforming the Kospi’s 0.8% increase.
Hyundai Mipo remains on course to post a profit turnaround in the second half of 2023 after three consecutive quarters of losses, Hana Securities analyst Yoo Jae-seon said in a research note Monday.
Profitability is improving for Hyundai Mipo, with new ship-building contracts likely to boost profit margins, and as the negative earnings impact from weak-margin deals signed by the company in the past will likely taper off by the second quarter of 2023, the analyst noted.
Yoo remains upbeat on Hyundai Mipo, which had secured $1.5 billion worth of new contracts for the first four months of this year, or 40.8% of its 2023 annual target. The company said Monday that it snatched up a KRW414.50 billion new deal to build five container ships for a client in Europe.
The analyst said in a separate research note Monday that he also expects Daewoo Shipbuilding to post a profit turnaround in the second half of 2023 on contract wins for LNG carriers and other vessels, which offer betters margins.
Daewoo Shipbuilding, due to be renamed as Hanwha Ocean at its shareholders’ meeting on Tuesday after being integrated into South Korean defense, technology and energy conglomerate, Hanwha Group, stands to gain from the merger in the long term, the analyst said.
Hana maintained its target price of KRW33,000 for Daewoo Shipbuilding and KRW120,000 for Hyundai Mipo, while keeping a buy rating on both stocks.
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