KOSPIShipbuilding009540

HD Korea Shipbuilding & Offshore Engineering

₩326,000▲ 0.15%2026-10-02 close

Market Cap

₩23.1T

Turnover

₩31.2B

Volume

100,000 shares

Shares out.

70.8M

PER

7.1×

PBR

1.7×

EPS

₩48,764

Dividend Yield

3.53%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩12,300 per share · Prices as of the 2026-10-02 close

Report overview

Shipbuilding Holdco Riding the High-Price Delivery Cycle

As low-priced legacy orders run off and high-priced vessels enter the delivery phase, quarterly profit has reached record levels, yet a projected slowdown in global newbuild ordering and the discount attached to its intermediate holding-company structure sit on the other side of the ledger.

1
Annual operating profit moved from a KRW 355.6bn loss in 2022 to KRW 282.3bn in 2023, KRW 1,434.1bn in 2024 and KRW 3,904.5bn in 2025, with the operating margin rising from -2.1% to 13.0%.
2
Second-quarter 2026 revenue was KRW 8,927.0bn with operating profit of KRW 1,645.1bn, a 18.4% quarterly operating margin; the company said its shipbuilding division margin reached 18.8% with no one-off items.
3
Shipbuilding affiliates booked USD 16.38bn of orders in the first half of 2026, filling 96.2% of the shipbuilding division target; as of an August 24 filing, cumulative orders reached 162 vessels worth USD 18.08bn, or 77.6% of the group's USD 23.31bn annual target.
4
The order backlog exceeds 500 vessels, equal to roughly three and a half years of work, but the Export-Import Bank of Korea projected 2026 global newbuild orders at 35m CGT, down 14.6% year on year.
5
The debt-to-equity ratio fell from 160.6% in 2023 to 133.9% in 2025 and operating cash flow reached KRW 4,422.1bn in 2025, creating balance-sheet capacity to discuss both higher payouts and investments such as US shipbuilding cooperation.

Business structure

HD Korea Shipbuilding & Offshore Engineering is the intermediate holding company for HD Hyundai Group's shipbuilding and offshore division; rather than building vessels itself, it manages subsidiary stakes and runs group-level design, research and procurement functions.

Profits generated at the operating companies flow up to it as dividends and are then distributed to parent HD Hyundai and minority shareholders, while actual construction is handled by HD Hyundai Heavy Industries and HD Hyundai Samho.

In the divisional breakdown the company disclosed on July 29, 2026, shipbuilding led with second-quarter revenue of KRW 7,451.0bn and operating profit of KRW 1,398.6bn, while engines and machinery posted revenue of KRW 760.2bn with operating profit of KRW 268.6bn and offshore plant posted revenue of KRW 377.1bn with operating profit of KRW 60.1bn.

In short, most consolidated revenue comes from merchant shipbuilding, with engines and offshore plant as secondary pillars.

By subsidiary in the same quarter, HD Hyundai Heavy Industries posted revenue of KRW 6,332.2bn and operating profit of KRW 1,039.9bn, HD Hyundai Samho KRW 2,371.4bn and KRW 534.1bn, and engine affiliate HD Hyundai Marine Engine KRW 128.1bn and KRW 31.3bn.

Core vessel types span LNG carriers, very large gas carriers, very large ammonia carriers, floating storage and regasification units, very large crude carriers plus Suezmax, MR and LR2 tankers, container ships, car carriers and liquefied CO2 carriers.

Customers are mainly European, Asian and Oceanian shipowners and energy firms, and because contracts are largely dollar-denominated, exchange rates feed directly into earnings.

Beyond merchant vessels, the group runs naval and US Navy maintenance, repair and overhaul work, with HD Hyundai Heavy Industries winning two US Navy MRO contracts in 2026.

On the new-business side, the company added digital engineering and manufacturing platform development to its articles of incorporation in March 2026, then signed a shipyard modernization cooperation memorandum with US-based Fraser Industries in July, targeting a consulting program supply contract within the year.

Competitively, it faces Samsung Heavy Industries and Hanwha Ocean domestically and Chinese yards, the global volume leaders, in the contest for high-value vessel types.

Earnings trend

Quarterly revenue · Operating profit

₩7.4T₩953.6B25Q2₩7.6T₩1.1T25Q3₩8.2T₩1T25Q4₩8.1T₩1.4T26Q1₩8.9T₩1.6T26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩17.3T-₩355.6B2022₩21.3T₩282.3B2023₩25.5T₩1.4T2024₩29.9T₩3.9T2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩7.4T	₩953.6B	12.8%
2025Q3	₩7.6T	₩1.1T	13.9%
2025Q4	₩8.2T	₩1T	12.7%
2026Q1	₩8.1T	₩1.4T	16.7%
2026Q2	₩8.9T	₩1.6T	18.4%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩17.3T	-₩355.6B	-₩216.9B	−2.1%	−2.2%	142.7%
2023	₩21.3T	₩282.3B	₩221.7B	1.3%	2.2%	160.6%
2024	₩25.5T	₩1.4T	₩1.2T	5.6%	10.6%	159.4%
2025	₩29.9T	₩3.9T	₩2.2T	13.0%	16.3%	133.9%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

The earnings trajectory is a three-year recovery story. From revenue of KRW 17,302.0bn with a KRW 355.6bn operating loss and a KRW 216.9bn net loss attributable to owners in 2022, the company swung to profit in 2023 with revenue of KRW 21,296.2bn and operating profit of KRW 282.3bn, a 1.3% margin.

That was followed by 2024 revenue of KRW 25,538.6bn and operating profit of KRW 1,434.1bn (5.6%), then 2025 revenue of KRW 29,933.2bn and operating profit of KRW 3,904.5bn (13.0%), with 2025 net profit attributable to owners of KRW 2,168.4bn.

On a quarterly basis, margins hovered in the 12-14% range from second-quarter 2025 revenue of KRW 7,428.4bn and operating profit of KRW 953.6bn (12.8%) through fourth-quarter 2025 revenue of KRW 8,151.7bn and operating profit of KRW 1,037.9bn (12.7%).

They then stepped up over two consecutive quarters, to first-quarter 2026 revenue of KRW 8,140.9bn and operating profit of KRW 1,356.0bn (16.7%) and second-quarter 2026 revenue of KRW 8,927.0bn and operating profit of KRW 1,645.1bn (18.4%), with second-quarter 2026 net profit attributable to owners of KRW 1,287.5bn.

Management attributed the margin gain to the near-exhaustion of low-priced legacy orders and a rising share of high-value vessels such as LNG carriers and VLGCs, and said no separate one-off items were reflected in the quarter's operating profit.

On currency, the average won-dollar rate rose by KRW 36 quarter on quarter in the second quarter, adding roughly KRW 30bn to operating profit, while steel plate prices held near the prior quarter's level, limiting cost pressure.

Cash generation improved ahead of reported profit, with operating cash flow expanding from KRW 2,081.6bn in 2023 to KRW 4,288.7bn in 2024 and KRW 4,422.1bn in 2025.

The balance sheet moved the same way: the debt-to-equity ratio eased from 160.6% in 2023 to 159.4% in 2024 and 133.9% in 2025, and total equity at end-2025 stood at KRW 16,908.4bn, of which KRW 13,286.1bn was attributable to owners and KRW 3,622.3bn to non-controlling interests.

These figures are confirmed disclosure data; results after the second quarter of 2026 have not yet been finalized in filings.

Industry analysis

Shipbuilding runs on a two-to-three-year lag between orders and revenue recognition, so what Korean yards are booking today came from a period of rising vessel prices.

The Clarksons newbuilding price index stood at 186.34 at the end of August, up 0.85 points from 185.49 a month earlier and 28% above the August 2021 level, with LNG carriers at USD 248.5m, VLCCs at USD 131.0m and 22,000-24,000 TEU mega container ships at USD 254.0m.

The defining feature of this cycle is that prices are holding high while order volumes are slowing.

The Export-Import Bank of Korea's overseas economic research institute projected global newbuild orders falling 14.6% from 41m CGT in 2025 to about 35m CGT in 2026, with order value down roughly 15% from USD 132bn to USD 112bn.

By contrast, the global order backlog stood at roughly 207m CGT and USD 657bn at the end of June, about 21% of the existing fleet, and Clarksons noted the backlog is concentrated in large container ships and gas carriers while a sharp rise in tanker ordering during 2026 is building future crude carrier supply pressure.

That points to an asymmetric phase in which yards hold ample work while shipping accumulates supply risk. On competitive positioning, China leads on volume: in one monthly Clarksons tally Korea took 1.59m CGT, or 39% of the world total, against China's 2.15m CGT.

On Japan's re-entry into LNG carriers, one analysis noted Japan has had no LNG carrier construction record since 2019, targets completion of a new large dock in 2035, and its three major yards aim for only three to five LNG carriers a year around 2035, versus 71 LNG carriers delivered by Korea in 2025.

Ultimately what matters is less total ordering than the scarcity of high-value slots and the direction of vessel prices.

Outlook

The company's stated 2026 order target for shipbuilding and offshore is USD 23.31bn. That is about 29.1% higher than the prior year and would mark a record order intake if achieved.

On the second-quarter 2026 conference call, management said shipbuilding affiliates booked USD 16.38bn in the first half, or 96.2% of the annual target, with HD Hyundai Heavy Industries exceeding its full-year target within six months, and that the mix included 38 VLGCs, 17 LNG carriers, one FSRU plus VLCC and Suezmax tankers.

By an August 24 filing, cumulative orders had reached 162 vessels worth USD 18.08bn, equal to 77.6% of the annual target.

The company said it will maintain a profitability-first selective ordering strategy in the second half, noting a backlog of more than 500 vessels equal to roughly three and a half years of work, and that while Middle East conditions and the global economy will keep markets uncertain, structural mid-to-long-term demand from tighter environmental rules, the energy transition and fleet replacement remains intact.

Management said that with the annual order target effectively met, the second half will focus on profitability rather than volume. New-business milestones also bear watching.

With Fraser Industries, the company targets a shipyard modernization consulting program supply contract within the year, aiming to develop the Lake Superior-based Fraser yard as a demonstration model for modernizing US shipbuilding.

The company said a US unmanned surface vessel is being co-developed with defense firm Anduril and, after a first demonstration, the next order is expected from 2027 onward.

Domestically, it began developing a platform in 2026 integrating 3D design, product lifecycle management and digital manufacturing, to be rolled out progressively at HD Hyundai Heavy Industries and HD Hyundai Samho in 2028 as the digital backbone of its Future of Shipyard concept targeted for completion in 2030.

Valuation

PER

7.1×

PBR

1.7×

ROE

25.7%

EPS

₩48,764

BPS

₩209,717

Dividend per share

₩12,300

After profit shifted decisively from an operating loss in 2022 to KRW 3,904.5bn of operating profit in 2025, the price-to-earnings multiple based on the last four quarters of profit sits below the KOSPI market average.

The price-to-book ratio, by contrast, is above one, meaning the shares trade at a premium to net assets, and it is worth noting that the figure differs somewhat depending on the calculation basis, whether internally computed or per Korea Exchange disclosure.

Because this is an intermediate holding company with limited standalone operations, the value of its subsidiary stakes drives enterprise value, and the market typically applies a holding-company discount.

Yuanta Securities said in an August 25, 2026 report that it derived a target price of KRW 532,000 by applying a 50% holding-company discount to stake values based on listed affiliates' market capitalizations, and analyzed that the discount could widen to 60-70% if shareholder returns prove insufficient.

Total dividends rose 141.2%, from KRW 360.6bn for fiscal 2024 to KRW 869.8bn for fiscal 2025, and a quarterly dividend totaling KRW 459.6bn was approved for the second quarter of 2026.

Shipbuilding is a cyclical industry in which earnings multiples tend to look low near profit peaks and high near troughs, so the current multiple should be read alongside the quality of the backlog and the market's view of the next cycle.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Margin level reset by delivery of high-priced vessels

The annual operating margin climbed from -2.1% in 2022 to 1.3% in 2023, 5.6% in 2024 and 13.0% in 2025, and on a quarterly basis reached 16.7% in the first quarter of 2026 and 18.4% in the second.

The company said its shipbuilding division margin rose to 18.8%, up 2.2 percentage points quarter on quarter and 5.9 points year on year, with no one-off items in the quarter's operating profit.

It cited the near-exhaustion of low-priced legacy orders and a rising share of high-value vessels such as LNG carriers and VLGCs. Notably, profit growth has outpaced revenue growth for two consecutive quarters.

Three-and-a-half-year backlog and early order-target achievement

The company said a backlog of more than 500 vessels secures roughly three and a half years of work. Shipbuilding affiliates booked USD 16.38bn in the first half of 2026, filling 96.2% of the division's annual target, while HD Hyundai Heavy Industries exceeded its full-year target within six months.

The secured volume is skewed to high-value types including 38 VLGCs, 17 LNG carriers, one FSRU and VLCC and Suezmax tankers. A long backlog improves revenue visibility for several years and strengthens the position for pricing negotiations on remaining slots.

Cash build-up, expanding returns and new-business options

Operating cash flow grew from KRW 2,081.6bn in 2023 to KRW 4,422.1bn in 2025, while the debt-to-equity ratio fell from 160.6% to 133.9% over the same period. Total dividends rose 141.2%, from KRW 360.6bn for fiscal 2024 to KRW 869.8bn for fiscal 2025.

Yuanta Securities assessed that HD Hyundai Heavy Industries and HD Hyundai Samho hold roughly KRW 5tn and KRW 2.7tn of net cash respectively, giving room for measures such as special dividends, and that the 69.2% stake in HD Hyundai Heavy Industries is a further potential monetizable resource.

Separately, whether non-construction solutions work such as the Fraser Industries shipyard modernization cooperation becomes a new revenue stream is worth tracking.

Bear factors

Global newbuild ordering itself is contracting

The same report warned that falling orders can put downward pressure on newbuilding prices, creating a structural chain of weaker negotiating power and lower profitability.

With adoption of amendments to the IMO's Net Zero Framework delayed by at least a year at an MEPC meeting, the odds of shipowners waiting on the sidelines have risen. A long backlog also means today's ordering slowdown shows up in results only years later.

Holding-company discount and multiple listings

As an intermediate holding company that does not build vessels itself, its enterprise value rests on the value of listed and unlisted subsidiary stakes.

Yuanta Securities analyzed that the holding-company discount could widen to 60-70% if shareholder returns are insufficient, and viewed active measures such as buybacks and share cancellation as important.

Within HD Hyundai Group, eight affiliates including the holding company and subsidiaries are separately listed, so dividends are distributed along multiple paths.

Even strong operating-company results leave open the separate question of how much of that value is reflected in the intermediate holding company's share price.

Currency, raw materials and Chinese volume pressure

In the second quarter of 2026 the average won-dollar rate rose KRW 36 quarter on quarter, adding roughly KRW 30bn to operating profit, which means a reversal in the currency would be an equally sized headwind.

One brokerage analysis noted company guidance assumed a conservative won-dollar rate of KRW 1,350 and a 20% rise in steel plate prices, making any renewed increase in plate costs a key input variable. On volume, China leads: in one monthly Clarksons tally China took 2.15m CGT against Korea's 1.59m CGT.

In addition, one assessment cited the loss of a Canadian submarine project, slower-than-expected LNG carrier price increases and uncertainty over naval business expansion as reasons sector expectations were reset.

Risk factors

Cycle and ordering risk

The core question raised by Clarksons and others is not how many ships yards can build but whether global shipping will actually need that capacity when these vessels arrive in 2027-2029, with a record backlog cutting both ways: prosperity for yards and a supply pipeline burden for shipping.

With container ship ordering, a large contributor to the company's merchant vessel results, seen at risk of contracting on oversupply concerns, diversifying vessel types has become a task. The structural feature that prolonged order gaps raise fixed dock costs also needs to be kept in view.

Policy and geopolitical risk

The company said second-half markets may remain uncertain due to Middle East conditions and global economic trends.

On US-related expectations, one analysis noted institutional barriers such as 10 U.S.C. 8679 restricting overseas construction of naval vessels, meaning large-scale direct US warship construction by Korean yards would require regulatory change or congressional cooperation.

The possibility that policy direction shifts after the US midterm elections, weakening potential benefits for Korean yards, was also cited as a market concern. Analysts have also pointed to intensifying US-China trade friction as a factor delaying shipowners' ordering decisions.

Capital allocation and project execution risk

Record shipbuilding profits have expanded dividend capacity, but spending needs are rising simultaneously across US shipbuilding entry, overseas production bases and smart shipyard construction, making the balance between growth investment and shareholder returns a live issue.

The Fraser Industries agreement has not disclosed contract size or project schedule. The unmanned surface vessel co-developed with Anduril is at a stage where the next order is expected only from 2027 onward, after a first demonstration.

Offshore plant and naval projects carry the inherent characteristic that design changes and schedule slippage can drive cost increases.

What to watch next

Late October 2026
Third-quarter 2026 results and the earnings call. Whether the 18.8% second-quarter shipbuilding division margin holds or expands, and whether the company-wide margin extends its two-quarter climb, will indicate how durable the high-price delivery effect is.
During Q4 2026
Whether the shipyard modernization consulting program supply contract with Fraser Industries is signed. The company said it targets signing within the year but has not disclosed size or schedule, so an actual contract filing would be the first checkpoint validating the non-construction solutions business.
September to December 2026, monthly
The monthly direction of the Clarksons newbuilding price index, which stood at 186.34 at end-August, and the pace of cumulative achievement against the USD 23.31bn annual order target, at 77.6% as of August 24. Second-half global LNG project final investment decisions and LNG carrier ordering should be tracked alongside.
Around January 2027
The 2027 order and revenue targets and guidance assumptions presented at the group's new-year briefing. One analysis said the 2026 guidance assumed a conservative won-dollar rate of KRW 1,350 and a 20% rise in steel plate prices, so the currency and plate-price assumptions behind the new targets will shape earnings expectations.
From 2027 onward
Whether follow-on orders emerge for the US unmanned surface vessel co-developed with Anduril. The company said the next order is expected from 2027 onward after a first demonstration, which will help determine whether naval and defense work becomes an earnings pillar separate from the merchant cycle.

Overall view

HD Korea Shipbuilding & Offshore Engineering's recent results point clearly in one direction.

Annual operating profit moved from a KRW 355.6bn loss in 2022 to KRW 3,904.5bn in 2025, the operating margin from -2.1% to 13.0%, and second-quarter 2026 revenue of KRW 8,927.0bn with operating profit of KRW 1,645.1bn produced an 18.4% quarterly margin.

The company attributed this to the run-off of low-priced orders and a rising share of high-value vessels, and said no one-off items were in the quarter, suggesting the improvement came from mix rather than accounting factors.

A backlog of more than 500 vessels, roughly three and a half years of work, supports revenue visibility for the coming years.

On the other side sit a projection that 2026 global newbuild orders will fall 14.6% to about 35m CGT and a brokerage analysis that the holding-company discount could widen further depending on the strength of shareholder returns.

In other words, the income statement today reflects past orders while the share price is trying to price the next cycle and capital allocation, leaving the two timeframes out of step.

Readers should watch the durability of shipbuilding margins from the third quarter, the closing pace against the annual order target, and whether return policies covering dividends and buybacks are made concrete. This report is for information purposes and contains no buy or sell opinion or target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.