HJ Shipbuilding & Construction Gains Momentum in Second-Half Special Ship Orders, Raising Expectations for Overseas Patrol Boats

[Financial News] HJ Shipbuilding & Construction is signaling a strong rebound in earnings as it prepares for a double win in domestic and overseas special ship orders in the second half of this year. Market attention is focused on whether the company can secure both a follow-up contract for the Navy's new patrol boat, scheduled for November, and an overseas patrol boat order at the same time.

According to the industry on the 25th, HJ Shipbuilding & Construction is seeing rising expectations for a follow-up contract for the Navy's new patrol boat, a key asset in defending the Northern Limit Line (NLL). At the same time, the company is also widely expected to win an overseas patrol boat order in the second half of the year. The domestic PKMR order is believed to involve two vessels.
The PKMR (Patrol-boat Killer Medium Rocket), also known as the Eagle-class, is a fast patrol asset used in the Navy's coastal combat operations and is regarded as frontline firepower. Equipped with waterjet propulsion, it can operate even in shallow waters. Compared with the previous model, it is said to feature major performance upgrades, including an advanced combat system, anti-ship missile decoy systems, and electronic warfare equipment.
In fact, the lead ship of the PKMR Eagle-class Batch-II was introduced as integrating the control and launch functions of a 130 mm guided rocket and a 12.7 mm remote weapon station with the combat system. It also strengthens anti-jamming capabilities, improving its electronic warfare response.
Overseas orders are another key factor. Industry sources say the schedule for an overseas patrol boat deal may also align with the November target, just like the domestic contract. If that happens, the company could further stabilize special ship sales and improve visibility for second-half earnings. However, the landing craft pipeline in the United Arab Emirates is expected to be delayed because of the impact of the Iran conflict.
Kim Dae-sung, a researcher at DS Investment & Securities Co., Ltd., said, "HJ Shipbuilding & Construction has a rich pipeline in special ship exports. Two projects are currently pending: the existing UAE landing craft and patrol boats for Southeast Asia. In particular, the landing craft is expected to make a large contribution to earnings if ordered, as it is the highest-priced model HJ Shipbuilding & Construction can build relative to its size." He added, "Even without the overseas warship export momentum, cooperation under MASGA and related efforts could continue to improve visibility for orders from the Military Sealift Command and for warships."
 
As a result, some observers say HJ Shipbuilding & Construction's profit structure will gradually strengthen. According to DS Investment & Securities Co., Ltd.'s research center, special ship sales are estimated to rise to 407 billion won in 2025, 412 billion won in 2026, and 466 billion won in 2027. Total shipbuilding sales are projected to increase to 2 trillion won in 2025, 2.671 trillion won in 2026, and 2.951 trillion won in 2027. Operating profit is also expected to expand sharply over the same period, reaching 67 billion won in 2025, 218 billion won in 2026, and 325 billion won in 2027.

HJ Shipbuilding & Construction is pursuing a strategy that goes beyond building combat ships by leveraging its Maintenance, Repair, and Overhaul (MRO) capabilities to expand into overseas naval markets. Entry into the U.S. Navy MRO market, worth about 20 trillion won a year, is expected to provide a new growth platform for the company.

In this context, HJ Shipbuilding & Construction's MRO contract for the 40,000-ton logistics support ship USNS Amelia Earhart and its history of signing a Master Ship Repair Agreement (MSRA) are also being cited as investment points. Since the MSRA is granted by the U.S. Navy to companies whose ship maintenance capabilities have been verified, it is seen as lowering the barrier to participation in follow-up bids.

Kim said, "Even without the overseas warship export momentum, visibility for orders from the Military Sealift Command and warships remains high." He added, "Growth in earnings is expected through cooperation related to Gunsan Shipyard, including MRO and large-vessel construction."[email protected] Kang Gu-gui Reporter