HD Hyundai Heavy Industries to Raise HiMSEN Engine Production Capacity to 7.2 GW; Margin Mix Expected to Improve Over the Medium to Long Term

[Financial News] HD Hyundai Heavy Industries plans to increase its production capacity for medium-sized power-generation engines to 7.2 GW by 2028. Analysts expect the company’s profitability structure to change as land-based power generation accounts for a larger share of its business. Daishin Securities maintained its “buy” rating on HD Hyundai Heavy Industries and its target price of 800,000 won.
According to Daishin Securities on the 11th, HD Hyundai Heavy Industries will invest a total of 833.6 billion won to expand its power-generation medium-sized engine facilities by 3 GW annually at a new plant in Ulsan and by 1 GW annually at the Hyundai Marine Engine plant in Mokpo. As a result, the production capacity of its self-developed HiMSEN engines will increase to a total of 7.2 GW, comprising 3.2 GW for marine applications and 4 GW for land-based power generation. The so-called “3+1” scenario has become a reality, with one additional expansion unit added to the three units anticipated by the market.
The existing Ulsan plant will focus on marine engines, while the Mokpo plant will flexibly allocate production between marine and power-generation engines.
Jini Lee, a researcher at Daishin Securities, said, “As power-generation engines account for a larger share of sales, the margin mix is also expected to improve over the medium to long term.”
Demand is not limited to AI data centers. Orders are expanding into industrial power generation, power-grid supplementation, emergency power generation for nuclear and gas turbines, and power ships. In particular, analysts say the value of medium-speed power-generation engines, which have relatively short lead times, is rising as delays in connecting global AI data centers to power grids coincide with shortages of gas turbines.
Containerized modules can be installed in parallel to increase generation capacity as needed. Fuel options can also expand beyond LNG and diesel to methanol and ammonia in the future. With suppliers continuing to hold the upper hand, bargaining power over selling prices is likely to shift toward manufacturers.
Small modular reactors are another new growth driver. HD Hyundai Heavy Industries will invest 238.6 billion won in related new facilities to build production capacity for two TerraPower Natrium-type sodium-cooled fast reactor SMR primary systems per year. Under its cooperation framework with Hyundai Engineering & Construction and TerraPower, the company is expected to manufacture key primary systems, including reactors, vessels and structures.
Lee emphasized, “The investment will serve as a medium- to long-term growth catalyst by enabling the company to secure manufacturing capabilities at an early stage.”

[email protected] Kang Gu-gwi Reporter