[E-Daily Reporter kyoungeun kim ] SANGSANGINVESTMENT&SECURITIES maintained its “Buy” investment rating on Hanwha Ocean(042660)but lowered its target price from 180,000 won to 130,000 won.
In a report released on the 9th, SEOYON, an analyst at SANGSANGININVESTMENT&SECURITIES, stated, “The key reason for the target price adjustment is the reduction of the premium previously applied to the company’s multiples based on its submarine competitiveness.”
The analyst explained, “With a German company selected as the preferred bidder for Canada’s next-generation submarine project on the 6th, expectations for the company to secure a large-scale overseas submarine order have subsided for now, and the stock price has also corrected by approximately -30% over the past two days.”
However, she added, “While it is regrettable that the event that could have supported the short-term stock price has dissipated amid a lack of momentum in the U.S. naval vessel market, there are still numerous other overseas naval vessel projects, including those in Thailand and Estonia. If these projects become more likely to be secured, the company is expected to reduce the fixed-cost burden associated with special-purpose vessels.”
Furthermore, he emphasized, “Despite the short-term correction, we believe the company’s stock price is likely to recover gradually due to an improved product mix and ongoing fundamental improvements driven by the strong won.”
Based on the previous day’s closing price, Hanwha Ocean’s current share price is 82,000 won, with upside potential of 58.5% relative to the target price.
Meanwhile, the firm forecast that second-quarter earnings would exceed consensus estimates due to one-time revenue and exchange rate effects. It projected revenue of 4.9523 trillion won (up 50% year-over-year) and operating profit of 550.6 billion won (up 48%).
He said, “Approximately 1.5 trillion won in one-time revenue is expected to be reflected in the offshore segment. As the delivery date for the P-79 Floating Production, Storage, and Offloading (FPSO) unit—which had been recognized as inventory under contract terms—approaches, this revenue is expected to be temporarily reflected in this quarter’s revenue.”