Brokerage : Kiwoom Securities
Analyst : Hangyeol Lee
Investment Rating : BUY (Maintained)
Target Price : KRW 144,000 (Maintained)
Core Momentum : Rapid merchant earnings expansion driven by the higher revenue mix of post-2024 high-price orders and structural cost reductions, with focus shifting to 2H order acceleration across merchant, naval, and offshore divisions
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY Maintained, Target Price maintained at KRW 144,000 (Current Price: KRW 88,800 as of July 27, 2026)
- 2Q26 Earnings Summary: Revenue came in at KRW 5.44 trillion (+65.2% YoY) and Operating Profit reached KRW 736.1 billion (+98.0% YoY, OPM 13.5%), substantially beating consensus (KRW 533.5 billion) and the brokerage’s forecast (KRW 547.4 billion).
- Key Forecast Financials (2025 → 2026F → 2027F):
- Revenue: KRW 12.78 trillion → KRW 15.88 trillion (+24.2% YoY) → KRW 15.98 trillion
- Operating Profit: KRW 1.17 trillion → KRW 2.21 trillion (+89.6% YoY, OPM 13.9%) → KRW 2.67 trillion
- EBITDA: KRW 1.40 trillion → KRW 2.54 trillion → KRW 3.03 trillion
- Net Profit (Controlling): KRW 1.25 trillion → KRW 1.88 trillion → KRW 1.98 trillion
- EPS: KRW 4,066 → KRW 6,143 (+51.1% YoY) → KRW 6,460 (+5.2% YoY)
- BPS (2026E): KRW 26,337
- PER: 27.9x → 12.8x → 12.2x
- PBR: 5.64x → 2.99x → 2.40x
- ROE: 22.6% → 26.4% → 21.8%
- Net Debt-to-Equity Ratio: 80.8% → 44.9% → 27.3%
🚀 2. [Market Opportunities & Business Outlook]
- Merchant Division Margin Expansion: In 2Q26, the merchant shipbuilding division recorded revenue of KRW 3.24 trillion (+15% YoY, +16% QoQ) and operating profit of KRW 735.6 billion (+95% YoY, +47% QoQ, OPM 22.7%). Profitability accelerated sharply as high-price orders secured after 2024 made up over 70% of division revenue, aided by productivity gains, cost cuts, and favorable foreign exchange rates. As order prices in 2026 (for LNG carriers and VLCCs) remain 4–5% higher than 2025 levels, earnings growth is projected to continue through 2028.
- Offshore & Naval Business Status: The offshore division achieved a slight operating turnaround due to the one-time revenue recognition of ~KRW 1.5 trillion from the P79 project. The naval (special ship) division continued to log operating losses due to fixed-cost burdens.
- 2H Order Intake Requirements & Pipeline: Cumulative 1H26 merchant order intake reached 24 vessels (including 6 LNGCs and 15 VLCCs), necessitating additional order momentum in 2H to sustain annual capacity. A significant portion of 2029–2030 delivery slots for LNGCs is currently under negotiation, with order intake expected to expand as broader LNGC contracting gathers pace. For naval and offshore, active discussions are underway for domestic KDDX and Changbogo-N programs, US Navy RFI responses for combatants and auxiliary oilers, and various offshore tenders (FPSO, FLNG, WTIV).
📝 Editor’s Comment (Perspective)
The analyst views Hanwha Ocean as a shipbuilder demonstrating a rapid pace of fundamental earnings improvement in its merchant segment, supported by the swift revenue recognition of high-value order books and structural cost reductions. Beyond the immediate merchant margin surprise, this perspective places strategic emphasis on the need for follow-up order intake across merchant vessels, naval defense, and offshore projects in 2H to optimize annual production capacity and secure long-term revenue visibility.
To evaluate whether this investment thesis continues to materialize, key verification points include whether merchant operating margins remain elevated as 2024–2025 vintages expand in production, the conversion of 2029–2030 delivery slots into definitive LNGC contract awards, and concrete order gains in naval programs (including US Navy RFI outcomes and domestic programs) and offshore EPC tenders. These factors can be monitored through future quarterly earnings releases, official IR materials, regulatory filings, and periodic financial reports.
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