South Korea’s major shipbuilders, hit by worse-than-expected earnings and declining orders, have been trending lower over the past month, but their stock prices are likely to rebound from a deep trough on hopes that their earnings may improve down the road, analysts said Friday.
Hyundai Heavy Industries Co., the world’s largest shipbuilder, shocked investors by reporting an operating loss of 1.1 trillion won (US$1.07 billion) during the April-June period, from an operating loss of 189 billion won the previous quarter, as it set aside massive provisions against possible losses from ongoing projects and a stronger won undercut its earnings.
The stunning second-quarter performance drove Hyundai Heavy’s stock to its lowest level in a year at 133,000 won on Aug. 25, a sharp drop from 263,000 won on Jan. 2.But Hyundai Heavy has risen some 8 percent since then on hopes that its stock price has bottomed out.“Although an improvement in orders and earnings may be weaker than expected, Hyundai Heavy is judged to have hit the bottom,” said Jun Jae-cheon, an analyst at Daishin Securities.Its shipbuilding affiliate — Hyundai Mipo Dockyard Co. — has surged some 30 percent since hitting a yearly low of 106,000 won on August 25.“Hyundai Mipo’s stock fall was excessive… and the shipbuilder’s solid position in mid-sized ships may help boost its earnings down the road,” said Park Moo-hyun, an analyst at Hana Daetoo Securities.
Other shipbuilders also have seen their share prices slide on weaker-than-expected earnings. Samsung Heavy Industries Co. currently hovers at around the 26,500-won level after dipping to a yearly low of 25,150 won on July 11.