Brokerage : Kiwoom Securities
Analyst : Hangyeol Lee
Investment Rating : BUY (Maintained)
Target Price : KRW 179,000 (Maintained)
Core Momentum : Strong corporate earnings expansion powered by the revenue recognition of high-price LNGCs secured since 2023 and structural cost cuts in commercial shipbuilding, alongside expectations for naval and offshore order intake to alleviate fixed-cost burdens
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY Maintained, Target Price maintained at KRW 179,000 (Current Price: KRW 133,900 as of April 28, 2026)
- 1Q26 Earnings Summary: Revenue reached KRW 3.21 trillion (+2.1% YoY) and Operating Profit stood at KRW 441.1 billion (+70.6% YoY, OPM 13.7%), outperforming market consensus (KRW 373.5 billion) and the brokerage’s forecast (KRW 371.6 billion).
- Key Forecast Financials (2025 → 2026F → 2027F):
- Revenue: KRW 12.78 trillion → KRW 13.90 trillion (+8.7% YoY) → KRW 15.89 trillion
- Operating Profit: KRW 1.17 trillion → KRW 1.87 trillion (+60.0% YoY, OPM 13.4%) → KRW 2.50 trillion
- EBITDA: KRW 1.40 trillion → KRW 2.19 trillion → KRW 2.85 trillion
- Net Profit (Controlling): KRW 1.25 trillion → KRW 1.39 trillion → KRW 1.75 trillion
- EPS: KRW 4,066 → KRW 4,552 (+11.9% YoY) → KRW 5,720 (+25.7% YoY)
- BPS (2026E): KRW 24,746
- PER: 27.9x → 26.4x → 21.0x
- PBR: 5.64x → 4.85x → 3.93x
- ROE: 22.6% → 20.3% → 20.7%
- Net Debt-to-Equity Ratio: 80.8% → 48.0% → 36.8%
🚀 2. [Market Opportunities & Business Outlook]
- Merchant Division Margin Expansion: In 1Q26, the merchant shipbuilding unit posted revenue of KRW 2.79 trillion (+9% YoY) and operating profit of KRW 520.1 billion (+115% YoY, OPM 18%), driving the overall surprise. Key factors include ongoing cost reductions, early delivery effects via series construction, higher revenue share of high-price LNGCs ordered since 2023, and favorable FX movements.
- Merchant Vintage Mix Outlook: Annual revenue recognition by order vintage is projected at 10% for 2022, 15% for 2023, 40% for 2024, and 30% for 2025, with peak-price 2024–2025 orders making up 70% of total revenue. VLCC profitability has also recovered to double digits via cost optimization, supporting margin strength.
- Offshore & Naval Defense Order Pipeline: In 1Q26, the special ship and offshore divisions recorded operating losses of KRW 20.8 billion and KRW 73.9 billion, respectively, due to fixed-cost burdens relative to current scale. The offshore unit plans to participate in up to 3 FPSO project biddings in Africa and Central/South America. The special ship unit is targeting the Canadian CPSP submarine tender (selection expected in 2H26), alongside KDDX and Thai surface ship contracts (expected within the year), with additional submarine pipelines developing across the Middle East, APAC, Latin America, and Europe.
📝 Editor’s Comment (Perspective)
The analyst views Hanwha Ocean as a shipbuilder demonstrating solid margin expansion in its commercial division through structural cost savings and high-value order execution, while actively working to absorb fixed-cost burdens in its naval and offshore divisions through incoming project awards. This perspective highlights commercial shipbuilding profitability as the core earnings pillar, while placing strategic emphasis on securing large-scale defense and offshore contracts to achieve comprehensive operational recovery.
To evaluate whether this investment thesis continues to materialize, key verification points include whether merchant operating margins remain elevated as high-price 2024–2025 order vintages reach 70% of the mix, bidding results for up to 3 FPSO projects across Africa and Latin America, and definitive outcomes regarding the Canadian submarine program alongside contract executions for KDDX and Thai naval tenders. These factors can be monitored through future quarterly earnings releases, official IR materials, regulatory filings, and periodic financial reports.
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