[Edaily Reporter kyoungeun kim ] Meritz Securities stated that the grounds for a “Strong Buy” recommendation have been established for Hyundai Heavy Industries ( HD HYUNDAI HEAVY INDUSTRIES(329180)), which simultaneously announced plans to expand its engine production capacity and invest in small modular reactors (SMRs). Analysts suggest that this announcement signals a rebound for shipbuilding stocks, which had been underperforming.
In a report released on the 11th, Bae Ki-yeon, an analyst at Meritz Securities, commented on the large-scale engine expansion plan: “Upon completion of the expansion, HD HYUNDAI HEAVY INDUSTRIES’ engine division is expected to more than double its revenue capacity compared to current levels, and HD HYUNDAI MARINE SOLUTION CO., LTD is also expected to see a rise in revenue, albeit with a time lag.”
HD HYUNDAI HEAVY INDUSTRIES announced plans the previous day to expand production capacity for onshore power generation engines (including those for data centers) by 3.3 gigawatts (GW) and for marine power generation engines by 0.9 GW.

Regarding this, Analyst Bae emphasized, “This announcement of a large-scale expansion plan for ‘engines’—a product category set to drive significant benefits for the shipbuilding industry during the AI data center expansion cycle—
,” adding, “We have finally confirmed the signal for a rebound in shipbuilding stocks, which had been sluggish, by 2026.”
He continued, “Although yesterday’s closing prices showed a ‘sell-on’ and ‘separating the wheat from the chaff’ pattern—with HD HYUNDAI HEAVY INDUSTRIES down 2.16% and HD HYUNDAI MARINE SOLUTION CO., LTD up 9.03%—this is a misinterpretation,” and emphasized, “The expansion plan announced yesterday serves as the basis for a ‘Strong Buy’ rating on both HD HYUNDAI HEAVY INDUSTRIES and HD HYUNDAI MARINE SOLUTION CO., LTD.”
He also added that the firm maintains its “Top-Picks” rating on a total of four stocks related to data center engines, including Hanwha Engine(082740)and STXEngineCo.,Ltd(077970).
Regarding the effects of the capacity expansion, Analyst Bae stated, “HD HYUNDAI HEAVY INDUSTRIES’ engine sales capacity is expected to increase from approximately 4 trillion won currently to about 9 trillion won after the expansion,” and “The expected impact of HD HYUNDAI MARINE SOLUTION CO., LTD’s expansion is estimated at a total of approximately 1 trillion won—ranging from 200 billion won to 300 billion won at the Ulsan plant, and from 800 billion won to 900 billion won at the Yeongam and new plants,” he explained.
Regarding SMR investments, he noted, “The company has invested a total of 238.6 billion won and owns its own factory site,” adding, “An announcement has been made regarding plans to collaborate with HyundaiEngineering&Construction to build SMRs in the U.S. and around the world, similar to ‘TerraPower.’”
He stated, “HD HYUNDAI HEAVY INDUSTRIES holds a de facto exclusive right to supply fourth-generation primary equipment, and the plan is for HyundaiEngineering&Construction to handle construction while HD HYUNDAI HEAVY INDUSTRIES supplies the primary equipment,” adding, “We expect to generate some revenue in 2028 and anticipate making a full-scale entry into the SMR market through additional orders thereafter.”