AI Engine Market Twice as Large as Expected...This Stock’s Target Price Jumps 11%

[Financial News] NH Investment & Securities raised its target price for HD Hyundai Marine Solution from KRW 280,000 to KRW 310,000, an 11% increase, saying the company’s potential for long-term earnings growth has strengthened as the market for engines used in artificial intelligence (AI) data centers expands. It maintained its “Buy” rating.
Jeong Yeon-seung, a researcher at NH Investment & Securities, assessed HD Hyundai Marine Solution on the 11th, saying, “The expansion of data-center engines, which are expected to generate the highest profitability, was larger than anticipated.” He added, “The visibility of increased profits from mid- to long-term engine maintenance has also improved.”
The researcher particularly highlighted that the expansion of data-center engines exceeded twice the initial estimate. NH Investment & Securities had previously forecast an expansion of 1.5 GW, but the actual scale was set at 3.3 GW. As a result, revenue and profits related to data-center engines are expected to increase in earnest, beginning with the initial supply of parts in early 2028.
Jeong explained, “We expect the data-center engine maintenance business to generate approximately KRW 90.1 billion in operating profit in 2030.”
NH Investment & Securities expects related operating profit to rise rapidly from KRW 18.9 billion in 2028 to KRW 53.6 billion in 2029, KRW 90.1 billion in 2030 and KRW 141.8 billion in 2031.
The company’s business structure, in which the number of engines requiring maintenance grows as more engines are installed, was also cited as a strength. Unlike shipbuilders, whose performance fluctuates significantly depending on newbuild vessel orders, HD Hyundai Marine Solution is expected to continue growing its profits even after 2030 because maintenance demand accumulates as the installed engine base expands.
Jeong said, “Data-center engines have higher utilization rates and prices than marine engines, so they are expected to be the most profitable among the engines currently undergoing maintenance.” He added, “Unlike large shipbuilders facing concerns about an earnings peak-out, HD Hyundai Marine Solution’s earnings growth cycle will continue even after 2030.”
The researcher also forecast that earnings growth would accelerate further starting next year. This year’s estimated revenue is KRW 2.336 trillion and operating profit is KRW 389 billion, representing year-on-year increases of 17.8% and 11.0%, respectively. Next year’s operating profit is expected to reach KRW 537 billion, up 38.1%, while operating profit in 2028 is projected to rise 35.9% to KRW 729 billion.
Jeong said, “A payout ratio of around 70% is also a differentiating factor, as earnings growth translates directly into shareholder returns.” He added, “In 2027, unlike large shipbuilders, the company’s operating profit growth rate is expected to be even higher.”
[email protected] Bae Han-geul Reporter