[Edaily Reporter PARK MIN ] On the 18th, DS Investment & Securities maintained its target price of 37,000 won and “BUY” investment rating for HJ SHIPBUILDING & CONSTRUCTION(097230), forecasting that earnings growth will continue based on the trend toward larger-sized commercial ship orders and the potential for warship exports in the second half of the year. The closing price on the 14th was 17,900 won, leaving upside potential of 106.7% to reach the target price.

Kim Dae-sung, an analyst at DS Investment & Securities, stated in a report published that day, “There is also sufficient momentum for overseas exports of special-purpose vessels in the second half,” adding, “We believe that if the company succeeds in exporting warships overseas, the premium that major domestic shipbuilders receive for warship exports could also be fully factored into the valuation.”

First, the firm forecast that simultaneous growth in top-line revenue and profitability would continue as the tonnage of orders secured continues to increase. In fact, the container ships ordered by HJ SHIPBUILDING & CONSTRUCTION have grown in size—from the 7,900 TEU class in 2024 to the 8,850 TEU class in 2025, and to the 10,100 TEU class this year.

Following the securing of four 10,100 TEU-class container ships in the first half of this year, the company is expected to secure an additional four ships of the same class in the second half. Furthermore, significant repeat-order benefits are anticipated from the eight ships of the same class—the largest in the company’s order backlog—that are scheduled for construction.

In the specialty vessel business, the potential for overseas exports in the second half was cited as a key growth driver. The company explained that two projects in its order pipeline—a high-speed landing craft for the UAE and a high-speed patrol boat for Southeast Asia, both of which had been postponed due to geopolitical risks in the U.S. and the Middle East—are expected to materialize in the second half. In particular, the high-speed landing craft is one of the highest-priced models that HJ SHIPBUILDING & CONSTRUCTION is capable of building, and it is projected to make a significant contribution to earnings if the order is secured.

The earnings growth trend is expected to continue into the second half of the year. DS Investment & Securities projected HJ SHIPBUILDING & CONSTRUCTION(097230)’s third-quarter revenue at 655 billion won and operating profit at 59 billion won. For the fourth quarter, it estimated revenue of 744 billion won and operating profit of 69 billion won.

The full-year earnings outlook is also expected to improve significantly. Daol Investment & Securities projected that HJ SHIPBUILDING & CONSTRUCTION(097230)will post revenue of 2.671 trillion won and operating profit of 218 billion won this year. Compared to last year, this represents a 33.6% increase in revenue and a 224.7% increase in operating profit. For 2027, the firm forecast revenue of 2.951 trillion won and operating profit of 325 billion won, with operating profit expected to rise another 49.2%.

The operating profit margin is also projected to improve from 8.2% this year to 11.0% by 2027. Earnings per share (EPS) are estimated to rise from 2,000 won this year to 2,666 won in 2027, while the price-to-earnings ratio (PER) is expected to decline from 8.9x to 6.7x over the same period.

HJ SHIPBUILDING & CONSTRUCTION also has experience in building warships. According to DS Investment & Securities, the company is capable of constructing large transport ships, high-speed landing craft, surface ship rescue vessels, high-speed vessels, high-speed patrol boats, large patrol vessels, military supply support ships, and landing ships. The firm also highlighted the company’s track record in building the Solgae-class high-speed landing craft, the Dokdo-class and Marado-class large transport ships, and the Cheonwangbong-class landing ships.

Analyst Kim Dae-sung stated, “The company’s current stock price, based on a 12-month forward (12MF) P/E ratio of approximately 8x, is judged to be excessively undervalued relative to its commercial ship earnings growth and future momentum.” He added, “Even excluding the momentum from overseas warship exports, visibility for securing orders for the U.S. Strategic Commercial Fleet and warships is high following the legislative amendment, alongside MASGA-related collaborations.” He added, “Given that earnings growth is expected from collaborations related to the Gunsan Shipyard (MRO, large vessel construction, etc.), there is ample room for further re-rating in the future.”