By Kim Yoo-chul
It seems premature to say that the shipbuilding industry is on a full recovery track after a years-long slump.
But the situation is improving.
Investors are showing signs of a renewed appetite for shipbuilders’ stocks in South Korea’s markets, industry officials said Monday.
The Baltic Exchange's main sea freight index, which follows rates to ship dry commodities including cement, grain, coal and fertilizer, went up for the 10th straight session last week.
Another key measurement gauging the industry’s healthiness ― the Clarkson index ― maintained a stable level for the fourth consecutive week.
South Korea is home to the world’s three biggest shipbuilders ― Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy.
"The market seems to have gained further momentum," said Song Jae-hak, an analyst at Woori Investment.
"It is expected the freight rates and key indexes will steadily rise," he said.
Kyobo Securities said the combined book orders by the nation’s top six shipbuilders also including Hanjin Heavy and STX as of the end of August were reaching $24.7 billion ― 70 percent of this year’s projection of $34.8 billion.
Song expects container indexes to rise on a higher demand for overseas shipments.
A growing number of brokerages have joined the ranks in recommending investors buy shipbuilding shares, citing a good short-term outlook.
U.S.-based investment bank JP Morgan revised up its view on shipbuilders to "overweight" from "underweight," meaning a positive outlook for Hyundai, Daewoo and Samsung.
Mirae Asset Securities has set its target price for Hyundai Mipo to 390,000 won from 165,000 won per share, while Woori also raised its target for Hyundai to 330,000 won, and 350,000 won for Samsung Heavy.
"The global shipbuilding industry has been under the restructuring amid last year’s economic downturn, kicking second-tier players from the market. This has removed a great deal of uncertainty, leaving other shipbuilders better off," said Lee Suk-jae, an analyst at Mirae.