Hankook Securities maintained a buy rating for HD Hyundai on September 9 and raised its target price to 330,000 won. This adjustment is based on expectations of continued strong performance across its major subsidiaries, including shipbuilding, refining and chemicals, power equipment, construction machinery, and ship services.
Park Jong-ryul, a researcher at Hankook Securities, projected that HD Hyundai's consolidated revenue for the third quarter will increase by 14.8% year-on-year to 20.9 trillion won, with operating profit expected to rise by 88.6% to 3.2 trillion won. This follows a trend of solid operating results from the previous quarter.
HD Korea Shipbuilding & Offshore Engineering and HD Hyundai Oilbank are expected to lead the increase in consolidated operating profit, while most subsidiaries, including HD Hyundai Electric, HD Hyundai Site Solutions, and HD Hyundai Marine Solutions, are also anticipated to report robust results.
The growth in HD Korea Shipbuilding is attributed to an increased focus on high-value projects and improved productivity, while HD Hyundai Oilbank is expected to benefit from rising international oil prices and improved refining margins due to geopolitical risks. HD Hyundai Electric is projected to see gains from high-margin projects in the Americas and improved profitability in the power sector. HD Hyundai Site Solutions is expected to benefit from increased volume, improved product mix, price hikes, and reduced promotional costs. HD Hyundai Marine Solutions is also anticipated to maintain solid profitability by increasing its share of engines in the aftermarket.
The annual outlook remains positive. Park forecasts that HD Hyundai's consolidated revenue for the year will reach 86.1 trillion won, with operating profit at 13.8 trillion won, representing increases of 20.8% and 125.9%, respectively, compared to the previous year, maintaining previous estimates.
The diversified business portfolio across shipbuilding, power equipment, construction machinery, and ship services, along with expanding global demand, is expected to sustain performance momentum. In particular, HD Korea Shipbuilding is likely to see increased orders for LNG carriers due to the development of new LNG production projects in North America and a strong tanker market. HD Hyundai Electric is expected to benefit from structural growth in the power infrastructure market and competitiveness in high-value markets.
Park stated, "We are adjusting the target price upward to reflect strong performance and increased subsidiary valuations, applying a 45.0% discount rate to NAV considering performance momentum, shareholder returns, and governance issues."
* This article has been translated by AI.
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