Brokerage : SK Securities
Analyst : Seunghan Han (R.A : Seoyoung Ko)
Investment Rating : BUY (Maintained)
Target Price : KRW 134,000 (Lowered)
Core Momentum : Sustained merchant earnings expansion driven by a rising mix of high-price vessel construction, with focus shifting to global naval pipeline diversification and essential 2H offshore plant order intake following the Canadian submarine outcome
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY Maintained, Target Price lowered from KRW 175,000 to KRW 134,000 to reflect lowered special ship forecasts and multiples following the Canadian CPSP outcome (Current Price: KRW 81,300 as of July 10, 2026; Upside potential: 64.8%)
- 2Q26 Earnings Outlook: Consolidated Revenue estimated at KRW 3.47 trillion (+5.3% YoY, +8.0% QoQ), Operating Profit at KRW 516.7 billion (+39.0% YoY, +17.1% QoQ, OPM 14.9%), and Net Profit at KRW 400.0 billion, meeting market consensus (operating profit of KRW 525.2 billion).
- FY2026 Annual Estimate Revisions (Previous → New):
- Revenue: KRW 13.68 trillion → KRW 13.89 trillion (+1.6%)
- Operating Profit: KRW 2.05 trillion → KRW 2.08 trillion (+1.1%)
- Operating Margin (OPM): 15.0% → 14.9% (-0.1%p)
- Net Profit (Controlling): KRW 1.58 trillion → KRW 1.76 trillion (+11.0%)
- Net Profit Margin: 11.6% → 12.7% (+1.1%p)
🚀 2. [Market Opportunities & Business Outlook]
- Merchant Vessel Growth Drivers: Profitability improvement continues, supported by higher working days, productivity gains, structural cost savings, increased construction of high-price orders, and favorable FX movements. The 2026 revenue breakdown by order vintage is projected at <10% for 2022, 15% for 2023, 42% for 2024, and 28% for 2025, with vessel exposure consisting of LNG (under 50%), Container (under 10%), and VLCC (12%).
- Offshore Order Necessity: The offshore division is narrowing operating losses, but securing new project awards within 2026 is critical to prevent widening losses from 2027 onward. The company targets 2 offshore plant awards in 2H, including the Namibian Venus FPSO (~USD 3.0 billion).
- Naval Pipeline & MASGA Catalysts: Despite missing out on the Canadian CPSP, the company maintains active defense pipelines across Greece, Estonia, Saudi Arabia, Morocco, Egypt, the Philippines, and Chile. Competing alongside Germany’s TKMS in international tenders is viewed as a positive reflection of Hanwha Ocean’s submarine capabilities. Additionally, US DoD/Navy RFIs for combatants and medium-class auxiliary oilers are expected to highlight MASGA catalysts in 2H.
📝 Editor’s Comment (Perspective)
The analyst views Hanwha Ocean as a shipbuilder maintaining steady earnings growth in its commercial division through a rising high-price vessel construction mix, while navigating valuation adjustments in its defense segment and addressing pipeline requirements in offshore EPC. This perspective balances underlying merchant profitability against the necessity of securing 2H offshore projects and converting global naval pipelines to offset the Canadian submarine tender outcome.
To evaluate whether this investment thesis continues to materialize, key verification points include merchant margin resilience as post-2024 order vintages scale up, definitive contract awards for 2 offshore projects including the Namibian Venus FPSO in 2H, and concrete conversion of US Navy RFI engagements and 7-country naval export pipelines into actual contracts. These factors can be monitored through future quarterly earnings releases, official IR materials, regulatory filings, and periodic financial reports.
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