Brokerage : Eugene Investment & Securities
Analyst : Dongheon Lee, Seunghoon Yang
Investment Rating : BUY (Maintained)
Target Price : KRW 137,000 (Lowered)
Core Momentum : Sustained profitability improvement in the merchant ship division as high-price post-2024 orders enter production, with expectations turning toward global naval pipeline opportunities and MASGA progress following the pricing-in of the Canadian submarine outcome
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY Maintained, Target Price lowered from KRW 167,000 to KRW 137,000 based on a Target P/B of 3.6x (Current Price: KRW 88,800 as of July 27, 2026)
- 2Q26 Earnings Summary: Revenue reached KRW 5.44 trillion (+65% YoY), Operating Profit stood at KRW 736.1 billion (+98% YoY, OPM 13.5%), significantly surpassing market consensus (operating profit of KRW 533.5 billion). Revenue included a one-time recognition of ~KRW 1.5 trillion from the P-79 FPSO delivery.
- Key Forecast Financials (2025A → 2026E → 2027E → 2028E):
- Revenue: KRW 12.78 trillion → KRW 16.14 trillion → KRW 15.03 trillion → KRW 15.73 trillion
- Operating Profit: KRW 1.17 trillion → KRW 2.09 trillion (Raised from KRW 1.79 trillion) → KRW 2.61 trillion (Raised from KRW 2.23 trillion) → KRW 2.80 trillion
- Net Profit: KRW 1.25 trillion → KRW 1.74 trillion → KRW 1.70 trillion
- EPS: KRW 4,065 → KRW 5,676 (+39.6% YoY) → KRW 5,536 (-2.5% YoY)
- PER: 27.9x → 15.6x → 16.0x
- PBR: 5.6x → 3.4x → 2.8x
- ROE: 22.6% → 24.4% → 19.0%
- EV/EBITDA: 28.4x → 13.5x → 10.6x
🚀 2. [Market Opportunities & Business Outlook]
- Merchant Vessel Results & Vintage Mix: In 2Q26, the merchant shipbuilding division recorded revenue of KRW 3.24 trillion and operating profit of KRW 735.6 billion (OPM 22.7%). Profitability was driven by structural cost reductions—including design optimization, procurement competitiveness, and productivity gains—alongside revenue recognition of high-price LNGCs ordered in 2024 without large one-off gains. The 2024 order vintage accounted for 45–50% of 2Q sales, and the combined 2024–2025 share is estimated to approach ~90% in 2H26. The revenue share of gas carriers (~70% currently) is projected to decline toward 50% longer-term as VLCC and container ship contributions rise.
- Merchant Order Intake & Selective Strategy: 1H26 merchant orders totaled 24 vessels (6 LNGCs, 15 VLCCs, 3 VLGCs) valued at USD 3.8 billion. The company maintains a selective order strategy based on profitability, dock slot availability, and project terms, with focus on securing VLCC contracts above market-average profitability.
- Special Ship & Defense Pipeline: Expectations surrounding the Canadian submarine program (CPSP) are viewed as fully adjusted in the share price. Following the securing of the domestic KDDX detailed design and lead ship project, subsequent opportunities remain open across Thai frigates and submarine tenders in South America and Africa, alongside potential benefits from MASGA program materialization.
📝 Editor’s Comment (Perspective)
The analyst views Hanwha Ocean as a shipbuilder demonstrating solid margin sustainability in its merchant division through structural cost savings and the deployment of high-value 2024–2025 order vintages, while transitioning its defense focus toward a diversified pipeline of global naval projects following the pricing-in of the Canadian submarine bid outcome. This perspective emphasizes underlying earnings improvements driven by an optimized product mix and international defense opportunities rather than short-term order event volatility.
To evaluate whether this investment thesis continues to materialize, key verification points include the preservation of elevated merchant operating margins as 2024–2025 vintages expand to ~90% of the mix in 2H26, selective order momentum in high-margin VLCC contracts, and definitive contract awards across international naval tenders including Thai frigates and South American/African submarine programs. These factors can be tracked through upcoming quarterly earnings releases, official IR materials, regulatory filings, and periodic financial reports.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
