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Shipbuilding outlook

Korean shipbuilders sailing toward order target; shares on uptick

By Dec 22, 2020 (Gmt+09:00)

Korean shipbuilders sailing toward order target; shares on uptick

Shares of South Korea’s shipbuilders have been neglected in the market, lagging growth and value stocks, as orders for new ships almost stalled amid a global lockdown in the pandemic era.

But in the past few months, local shipbuilding companies began running their shipyards at full capacity to meet rising orders amid signs of a recovery in the global shipping industry, grabbing investor attention.

Shares of Korea Shipbuilding & Offshore Engineering Co., a unit of Hyundai Heavy Industries Group, have risen 39.7% since the start of November to finish at 109,500 won on Tuesday, outperforming the broader Kospi market’s 20.6% gain. Samsung Heavy Industries Co. advanced 39.4% in the same period, while Daewoo Shipbuilding & Marine Engineering Co. has risen 22.3%.

Shares of Hyundai Mipo Dockyard, which saw its order backlog rise faster and earlier than its rivals, have risen 75.9% in the cited period.

In its latest shipbuilding contract, Hyundai Mipo said on Monday it has received orders to build two LNG carriers and one petrochemical product carrier. On the same day, Hyundai Samho Heavy Industries Co., an affiliate of Korea Shipbuilding, said it has won orders to build four containerships and three LNG carriers.

According to Daishin Securities, Korea’s four biggest shipbuilders have clinched deals to build a combined 63 vessels worth $8.21 billion since Nov. 1. The orders are close to a third of their annual target of $26.7 billion.

As a result, Korea Shipbuilding achieved 84% of its yearly target as of Tuesday, while Hyundai Mipo attained 90% of its 2020 goal.


Analysts say that while a supercycle is unlikely in the near future, the shipbuilding industry has turned the corner and in 2021 will enjoy a jump in new orders from shipowners that delayed orders due to the pandemic.

“The dollar’s weakness versus the won, a recovery in global oil prices and rising economic activity all point to improved conditions for the shipbuilding industry,” said Daishin Securities analyst Lee Dong-heon.

Hyundai Heavy's shipyard in Ulsan, South Korea
Hyundai Heavy's shipyard in Ulsan, South Korea


According to DB Financial Investment analyst Kim Hong-gyun, Korean shipbuilders will see greater demand for LNG carriers in particular.

Shipowners placed orders for a total of 34 large-sized LNG carriers globally so far this year, down from 50 such vessels in 2019. The industry expects orders of at least 50 LNG carriers a year to be placed globally until 2025.

“Korean shipyards with years of experience in building LNG ships stand at an advantage compared with their global peers,” said DB Financial’s Kim.

Some analysts, however, remained cautious about Korean shipbuilders’ upside potential, citing their shares’ overshooting in recent weeks.

The price-to-book ratio (PBR) of Korean shipbuilders peaked at 1 in 2017, when the industry was booming.

Currently, Hyundai Mipo Dockyard’s PBR stands at 0.8, followed by Daewoo Shipbuilding (0.7), Samsung Heavy (0.7) and Korea Shipbuilding & Offshore Engineering (0.6).

Write to Yun-Sang Ko at

In-Soo Nam edited this article.

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