"Hanwha Engine to Ride Data Center Power Demand for High-Margin Ship Engines, Set for 'Quantum Leap' in Earnings": Yuanta Securities Korea

[Financial News] Hanwha Engine is set to accelerate sharp earnings growth, driven by improved profitability in large marine engines for the shipbuilding industry amid a supercycle, as well as its entry into the medium-speed engine market for power generation from AI data centers. As its backlog of high-value, eco-friendly ship engines begins to be recognized as revenue, the company also aims to become a key pillar in the Hanwha Group's North American power supply chain, based on its newly completed medium-speed engine production base.
According to Yuanta Securities Korea on the 28th, Hanwha Engine's growth is being firmly supported by its core low-speed, two-stroke marine engine business. As global newbuilding prices continue to rise, the share of orders for high-margin large container ship engines jumped sharply from 32% (KRW 100 billion) in the fourth quarter of 2024 to 60% (KRW 300 billion) in the first quarter of 2026. Over the same period, the share of its backlog tied to Chinese shipbuilders also surged from 33% (KRW 110 billion) to 49% (KRW 250 billion). From 2027, when the full effect of its expanded annual production capacity of 5.3 million horsepower is reflected, annual engine deliveries are expected to rise to about 135 units.
Backed by this momentum, Hanwha Engine's consolidated annual revenue is projected to jump from KRW 1.202 trillion in 2024 to KRW 1.615 trillion this year and KRW 2.347 trillion in 2027. Operating profit is also expected to rise sharply, from around KRW 72 billion in 2024 to KRW 224 billion in 2026 and KRW 439 billion in 2027, before surpassing KRW 500 billion in 2028.
A new growth engine has also emerged through its move into the land-based power generation market with four-stroke medium-speed engines. On the 19th, Hanwha Engine completed a medium-speed engine plant spanning 2,500 pyeong at its Changwon site and restored its own annual production capacity of 900 MW. As grid connection delays and surging power demand from AI data centers are driving a sharp increase in demand for on-site distributed power generation, the company is also widely seen as a strong candidate to become a key OEM partner for Everllence, a European holder of major global engine IP.
Synergy among Hanwha Group affiliates in the North American power business is also expected. With group companies such as Hanwha Energy, Hanwha Solutions, Hanwha Power, and Hanwha Advanced Materials actively targeting the North American power market, analysts say Hanwha Engine's medium-speed power generation engines could serve as a powerful complementary asset.
"Hanwha Engine has secured structural profitability improvement through higher-priced container ship orders and expanded deliveries to China in its core ship engine business through 2028," said Yongmin Kim, a researcher at Yuanta Securities Korea. "With the completion of its medium-speed engine plant in Changwon as a springboard, the company has very strong long-term growth potential as a key platform for entering the OEM market for AI data center power generation engines and expanding the group's North American power value chain."
[email protected] Kim Dong-ho Reporter