Brokerage : DS Investment & Securities
Analyst : Daesung Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 145,000 (Raised)
Core Momentum : Strong profitability expansion in the merchant ship division driven by ~70% recognition of high-price post-2024 vintages and cost optimization, coupled with prime positioning for US naval MASGA programs via Philly Shipyard
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY Maintained, Target Price raised to KRW 145,000 (Current Price: KRW 88,800 as of July 27, 2026; Upside potential: 63.3%)
- 2Q26 Earnings Summary: Revenue came in at KRW 5.4 trillion (+65.2% YoY), Operating Profit stood at KRW 736.1 billion (+98.0% YoY, OPM 13.5%), beating the brokerage’s operating profit forecast by 32.9%.
- Key Forecast Financials (2025 → 2026F → 2027F):
- Revenue: KRW 12.78 trillion → KRW 15.48 trillion → KRW 15.10 trillion
- Operating Profit: KRW 1.17 trillion → KRW 2.42 trillion → KRW 2.63 trillion
- Operating Margin (OPM): 9.1% → 15.7% → 17.4%
- Net Profit (Controlling): KRW 1.25 trillion → KRW 2.38 trillion → KRW 2.28 trillion
- EPS: KRW 4,066 → KRW 7,752 (+90.7% YoY) → KRW 7,455 (-3.8% YoY)
- PER: 27.9x → 11.5x → 11.9x
- PBR: 5.6x → 3.4x → 2.6x
- ROE: 22.6% → 33.4% → 24.8%
🚀 2. [Market Opportunities & Business Outlook]
- Merchant Vessel Profitability Surge: Achieved an operating profit margin of 22.7% in the merchant ship segment in 2Q26 without one-off gains, leading the domestic peer group. Key drivers include: 1) expansion of high-price post-2024 orders to ~70% of volume, 2) cost savings from design optimization and supply chain diversification, and 3) favorable FX effects. Solid earnings are expected to continue in 2H26 as ultra-high-price VLCC and container ship contracts are recognized despite a lower LNGC sales mix.
- Offshore & Special Ship Segments: The offshore division turned profitable on a one-time recognition of KRW 1.5 trillion in revenue from the delivered P79 project, with 2–3 FPSO project biddings scheduled in 2H26. The special ship unit narrowed operating losses via cost reductions despite marketing expenses for the Canadian CPSP; securing upcoming pipeline orders (Estonian OPV, Thai frigate) will be vital to alleviate fixed-cost burdens.
- US Defense & MASGA Frontline: Following Philly Shipyard’s MRIV (missile tracking vessel) contract, Hanwha Ocean is expected to participate in design and production support. By securing a US manufacturing base, the company stands at the forefront of Korean shipbuilders for MASGA initiatives, with potential US naval split-build projects and overseas defense contracts expected to help recover the premium lost after the Canadian CPSP outcome.
📝 Editor’s Comment (Perspective)
The analyst views Hanwha Ocean as a premier shipbuilder demonstrating industry-leading profitability in its merchant vessel division through high-price contract recognition and structural cost reductions, while standing at the forefront of Korean shipbuilders in the US naval defense market (MASGA) via Philly Shipyard. This perspective emphasizes the earnings strength driven by high-value merchant deliveries alongside the strategic advantage of having an operational footprint in the US defense market.
To evaluate whether this investment thesis continues to materialize, key verification points include whether merchant vessel margins remain elevated as high-price VLCCs and container ships enter revenue recognition in 2H26, contract finalizations for special ship bids such as the Estonian OPV and Thai frigate, and concrete progress in US naval split-build execution alongside upcoming FPSO tenders. These factors can be tracked via upcoming quarterly earnings reports, official IR disclosures, regulatory filings, and periodic financial reports.
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