[Edaily Reporter Hyera Lee ] On the 9th, DaishinSecurities maintained its “Buy” rating on Hanwha Ocean(042660), noting that despite failing to secure the Canadian submarine contract, the company’s overseas specialty vessel order pipeline remains robust. However, it lowered the target price to 139,000 won.

Lee Ji-ni, an analyst at DaishinSecurities, stated, “Despite the failure to secure the Canadian special-purpose vessel order, the current stock price is overly discounted when considering the diverse pipeline of special-purpose vessel orders from Egypt, Colombia, Saudi Arabia, and other countries.”
DaishinSecurities estimated Hanwha Ocean’s second-quarter revenue at 4.9352 trillion won and operating profit at 526.5 billion won. This represents year-over-year increases of 49.8% and 41.6%, respectively.
The analyst explained, “Due to a change in the revenue recognition timing for the FPSO project, approximately 1.5 trillion won in revenue is expected to be reflected in the second quarter,” adding, “While the original order size was around 1 trillion won, it expanded due to contract amendments (C/O) and a rise in exchange rates.”
He continued, “Since losses, such as those from cost overruns, have already been recognized as expenses in each quarter, the deficit will narrow in the second quarter, and profits related to contract amendments (C/O) will begin to be reflected in full starting in the third quarter.”
While the failure to secure the Canadian submarine project is regrettable, the analyst assessed that the company’s long-term growth potential remains intact. The analyst noted, “Although expectations for securing European special-purpose vessel orders have somewhat diminished due to the failure to win the Canadian CPSP contract, we are securing opportunities for special-purpose vessel orders in various countries, including Egypt, Colombia, the Philippines, and Saudi Arabia.” He also analyzed, “By leveraging the U.S.-based Pili Shipyard and Australia’s Ostal Shipyard, the company can generate synergies in securing orders for U.S. military support vessels,” adding, “The impact of this Canadian development on the company’s fundamentals is limited.”
However, DaishinSecurities set a target price of 139,000 won, a 15.2% reduction from the previous level. The analyst explained, “The target price reduction reflects a valuation adjustment due to weakened expectations for European specialty vessel orders,” but added, “The current stock price is trading at an excessive discount, which could actually present an investment opportunity.”