“Earnings Are Good, but Investor Sentiment...” Daehan Shipbuilding Price Target Cut

[Financial News] LS Securities said Daehan Shipbuilding Co., Ltd. has continued to deliver solid results, recording operating margins of at least 20% for eight consecutive quarters, but that weakening investor sentiment toward the shipbuilding sector is weighing on its share price. Accordingly, it maintained its “Buy” rating but cut its target price by 15.4%, from 65,000 won to 55,000 won.
Lee Jae-hyuk, a researcher at LS Securities, said on the 13th, “Despite fewer operating days during the off-season and a sharp drop in the won-dollar exchange rate, Daehan Shipbuilding Co., Ltd. increased the share of revenue from high-priced vessels and continued to post operating margins of at least 20% for eight consecutive quarters.”
Daehan Shipbuilding Co., Ltd.’s consolidated revenue in the third quarter of this year rose 19.6% from a year earlier to 327.7 billion won. Operating profit increased 24.4% to 82.7 billion won, exceeding the market forecast of 81 billion won. The operating margin was 25.2%. However, net profit fell 43.9% to 36.9 billion won due to valuation losses on dollar-denominated assets.
The target price was lowered despite improving results because investor sentiment toward the shipbuilding sector had weakened. LS Securities adjusted its target price-to-book ratio (PBR) to reflect this. It nevertheless estimated upside potential of 49.1% from the closing price of 36,900 won on the 12th.
Demand for crude oil tanker orders is expected to remain solid. Through October this year, global orders for very large crude carriers (VLCCs) and Suezmax-class tankers totaled 180 and 91 vessels, respectively, up 4.5-fold and 2.2-fold from the same period a year earlier.
The expansion of shareholder returns was also viewed positively. On the 10th, Daehan Shipbuilding Co., Ltd. decided on a medium-term shareholder return policy targeting a total shareholder return ratio of at least 30% for 2027–2029, as well as a 10 billion won share buyback and cancellation.
The researcher forecast, “Considering the supply gap resulting from the exit of the shadow fleet, the stronger financial capacity of major shipowners and shipping companies, and replacement demand for aging vessels as environmental regulations tighten, the strong market for crude oil tanker orders could continue for the time being.”

[email protected] Im Sang-hyeok Reporter