Value context and insight. lkm@koreatimes.co.kr
KSOE moves ahead of Hanwha Ocean, Samsung in H1
By Lee Kyung-min
By Lee Kyung-min
HD Korea Shipbuilding & Offshore Engineering (KSOE) has won about 90 percent of the annual target construction orders in the first six months of the year, in what the firm said was a result of exceptional experience and technology approved by the global market.
The figure, however, does not leave Hyundai affiliate's two key competitors ― Hanwha Ocean and Samsung Heavy Industries ― fretful, according to market watchers, since the two global players have already won years' worth of orders sufficient to generate ongoing profit. They are almost certain to win the second-half target orders, as determined by Qatar liquefied natural gas (LNG) carriers project. Last year, the three won the combined orders to build 40 ships during the first round.
According to market watchers, HD Hyundai's affiliate won orders of $14 billion (18 trillion won) as of June. This is 89 percent of the annual target order of $15.74 billion.
Of the 106 ships, over a third, or 33 are petrochemical carriers (PC), followed by three tankers, 29 containers, 18 LNG carriers, 16 liquefied petroleum gas (LPG) carriers, two medium-sized gas carriers, four Pure Truck & Car Carriers (PCTCs) and one marine equipment carrier.
The Hyundai affiliate's back orders are on a steady increase. The firm's investor relations data showed that 435 ships are on back orders as of June, up 8.5 percent from the year before.
But raising the annual target order is not on the cards.
“We plan to focus more on bolstering profitability for now, and not too much about achieving target orders,” a KSOE official said. “We have no plans to increase the annual target order.”
Underpinning the confidence is a stable increase in the orders, especially for green, high-value LNG and LPG ships.
Also promising is the growth of PCTC shipbuilding, far outpaced by China over the past few years. The rosy outlook for automobile exports is factored into boosting corporate performance.
Samsung Heavy received orders to build nine ships in the first half.
Total orders in the first six months came to $3.2 billion, about 34 percent of the annual target. The six-month figure for last year was $6.3 billion and $5.1 billion in 2021.
Six are LNG carriers, two are crude oil carriers and one is a floating liquefied natural gas (FLNG) facility.
The Samsung affiliate says the Qatar LNG project will be the surest performance booster since the order total is expected to exceed or remain similar to last year's.
“Korea's three shipbuilders won a combined 40 orders in the first round of the Qatar project, an outcome largely expected this year,” a Samsung Heavy Industries said.
“We plan to mobilize efforts to win greater orders for FLNG, a model that Samsung has demonstrated strength over our two peers for cost-effective and efficient performance. Four of five FLNGs in the world are being manufactured by us. We expect orders to continue as demand for LNG carriers is inching up.”
Hanwha Ocean on the other hand has registered the lowest number of orders out of the three.
Its order total stood at $1.1 billion in the January-June period, only about 15 percent of its annual target. Comparable six-month figures for 2021 and 2022 were $2.54 billion and $5.93 billion, respectively.
“The sheer numbers of orders look low, something we expected since our priority was winning highly profitable ships,” a Hanwha Ocean official said.
“But the first-half figures are not concerning, since we have won three years of work to generate profit. The Qatar project in the latter half will add to our growth momentum.”
NH Investment and Securities said the Hanwha affiliate merging with Daewoo Marine & Shipbuilding led to some delays and confusion in outlining business priorities. “Time is on the shipbuilder's side. Performances will pick up in the latter half,” analyst Jeong Yeon-seung said.