[Alpha Biz= Reporter Kim Sangjin] Korea Investment & Securities has projected that HD Korean Shipbuilding (009540) will expand its shareholder return policy, backed by stable earnings and improved productivity in shipbuilding, following a strong performance in Q3. They maintained a "Buy" rating with a target price of 260,000 KRW, while the previous closing price was 183,400 KRW.

According to Korea Investment & Securities, HD Korean Shipbuilding reported a consolidated revenue of 6.2458 trillion KRW for Q3, marking a 24.6% increase from the previous year, and an operating profit of 398.4 billion KRW, up 477.7%. The revenue was in line with market consensus, while the operating profit exceeded expectations by 11.4%.

The significant outperformance in operating profit is attributed to enhanced productivity across the three major shipbuilders. Analyst Kang noted that HD Hyundai Heavy Industries, HD Hyundai Mipo, and HD Hyundai Samho have exceeded their annual production targets by 2%, 3%, and 3%, respectively. With rising productivity, the mix of ship types and prices has quickly improved, contributing to both top-line and profitability growth.

The integration of new revenue streams has also positively impacted the consolidated results. On July 31, HD Korean Shipbuilding became the largest shareholder of HD Hyundai Marine Engines, and the performance of this subsidiary, which produces low-speed engines, turbochargers, and crankshafts, was reflected in the engine machinery division for two months.

One-off gains in the shipbuilding and marine sectors also contributed positively. Kang highlighted that the decline in steel prices contributed 6 billion KRW to the shipbuilding sector, while 23.8 billion KRW was recognized in the marine sector due to increased construction costs from contract changes.

Kang emphasized the importance of expanding shareholder returns, stating that HD Korean Shipbuilding plans to unveil its shareholder return strategy through value-up measures in December, with a total shareholder return rate (TSR) expected to be around 30%.

 

 

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