HD Hyundai Forecast to Post 3.2 Trillion Won in Third-Quarter Operating Profit, Up 88.6%

[Financial News] HD Hyundai is entering a revaluation phase, supported by solid earnings across its subsidiaries in shipbuilding, refining and chemicals, power equipment, construction machinery and marine services, an analysis found. Rising equity values of its subsidiaries have led to a higher target price.
Heungkuk Securities said on the 9th that HD Hyundai’s third-quarter consolidated revenue is expected to reach 20.9 trillion won, up 14.8% from a year earlier, while operating profit is projected at 3.2 trillion won, an 88.6% increase. The group is expected to post both double-digit growth and a sharp rise in earnings for the second consecutive quarter.
HD Korea Shipbuilding & Offshore Engineering (HDKSOE) and HD Hyundai Oilbank are leading the increase in consolidated operating profit. HDKSOE has entered a phase in which the effects of a higher proportion of high-priced, high-margin projects and improved productivity are beginning to be fully reflected. As high-priced orders secured since 2021 are recognized as revenue, the company’s profitability leverage is increasing. HD Hyundai Oilbank benefited from improved refining margins amid strong international oil prices and geopolitical risks, along with inventory-related gains.
The remaining subsidiaries are also performing solidly. HD Hyundai Electric continues to deliver high-margin projects to North America and improve profitability in its power business. Growing demand from data-center expansion in North America and the replacement of aging power grids is supporting medium- to long-term performance through a strong order backlog for transformers and distribution equipment. HD Hyundai Site Solution is benefiting simultaneously from higher volumes, an improved product mix, price increases and lower promotional expenses. HD Hyundai Marine Solution is maintaining solid profitability as the share of engines in its aftermarket business expands.
The outlook for next year was also maintained. Heungkuk Securities estimates HD Hyundai’s consolidated revenue at 86.088 trillion won in 2026 and 88.795 trillion won in 2027. Operating profit is expected to surge 125.9%, from 6.1 trillion won in 2025 to 13.778 trillion won in 2026, before reaching 11.982 trillion won in 2027. The assessment is that the group’s diversified portfolio spanning shipbuilding, power equipment, construction machinery and marine services will support earnings momentum as global demand expands.
By segment, HDKSOE is expected to benefit from increased orders for LNG carriers as new North American liquefied natural gas (LNG) production projects move into full-scale development, as well as from firm tanker market conditions. The U.S. drive to rebuild its domestic shipbuilding industry and discussions on shipbuilding cooperation between South Korea and the United States are also favorable factors for Korean shipbuilders. HD Hyundai Electric is expected to continue benefiting from structural growth in the power infrastructure market, product diversification and stronger competitiveness in high-value-added markets. The recovery in the construction machinery cycle will support HD Hyundai Site Solution, while continued inflows of eco-friendly dual-fuel (DF) engines and increased orders for long-term service agreements (LTSAs) will drive growth at HD Hyundai Marine Solution.
Valuation pressure remains low. Heungkuk Securities applied a 45.0% discount to net asset value (NAV), taking into account earnings momentum, shareholder returns and corporate governance. Despite the recent rebound in the share price, the actual discount has widened to 58.0%, while the 12-month forward price-to-earnings ratio (PER) and price-to-book ratio (PBR) remain at 5.9 times and 1.4 times, respectively. Even after accounting for the discount typically applied to holding companies, the stock appears excessively undervalued, the analysis said.
Park Jong-ryeol, a researcher at Heungkuk Securities, said, “Most subsidiaries are entering a phase in which their earnings capacity is improving simultaneously, and the increase in the equity value of the subsidiaries will gradually be reflected in the value of the holding company. The company needs to pursue shareholder-return policies more actively, including the cancellation of treasury shares, to encourage a reduction in the discount.”

[email protected] Kang Gu-gwi Reporter