KOSPIHolding Companies267250

HD Hyundai

₩200,500▲ 1.52%2026-10-02 close

Market Cap

₩15.9T

Turnover

₩29.5B

Volume

150K

Shares out.

79M

PER

6.2×

PBR

1.4×

EPS

₩38,697

Dividend Yield

1.66%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩4,000 per share · Prices as of the 2026-10-02 close

Report overview

All Units Firing; the Holdco Structure Is the Question

Shipbuilding, refining, power equipment and construction machinery all expanded profits at once, lifting quarterly operating profit to record territory, yet as a holding company over many listed subsidiaries, the share attributable to owners and the flow of dividend resources remain separate variables to track.

1
Second-quarter 2026 consolidated revenue was KRW 22.41tn with operating profit of KRW 4.12tn, a record-level quarter, bringing first-half operating profit to KRW 6.96tn.
2
The annual operating margin rose from 3.3% in 2023 to 8.6% in 2025, while the quarterly margin widened from 6.6% in 2Q25 to 18.4% in 2Q26.
3
The refining subsidiary's swing back to profit was cited as the key driver of the 2Q26 upside, which also means the flip side of geopolitically driven refining margins must be watched.
4
The shipbuilding arm said its backlog of more than 500 vessels equals three and a half years of work, while the power equipment arm raised its 2026 order target to USD 5.185bn.
5
The company says it will maintain a policy of paying out more than 70% of parent-basis net profit, while the fate of its 10.5% treasury stake has not yet been decided.

Business structure

HD Hyundai is a pure holding company that does not run manufacturing or sales operations itself; its main income comes from dividends and trademark royalties received from affiliates, which fund its own shareholder dividends.

Structurally, HD Hyundai owns stakes in intermediate holding companies by business line, which in turn own the operating companies, and in shipbuilding the chain runs from HD Hyundai to HD Korea Shipbuilding & Offshore Engineering to HD Hyundai Heavy Industries.

Key stakes are 35.05% in HD KSOE, 37.18% in HD Hyundai Electric, 80.22% in HD Hyundai Site Solution, 73.85% in HD Hyundai Oilbank and 55.32% in HD Hyundai Marine Solution, so consolidated revenue includes large units in which ownership is relatively low.

By second-quarter 2026 revenue, the mix ran energy (HD Hyundai Oilbank) KRW 9.48tn, shipbuilding and offshore (HD KSOE) KRW 8.93tn, construction machinery (HD Hyundai Site Solution) KRW 2.52tn, power equipment (HD Hyundai Electric) KRW 1.14tn and ship services (HD Hyundai Marine Solution) KRW 0.58tn, making refining and shipbuilding the twin pillars of the top line.

The product range spans LNG and gas carriers, container ships, marine and power-generation engines, gasoline, diesel and jet fuel plus lubricants and petrochemicals, extra-high-voltage transformers, distribution and rotating machinery, excavators and industrial and defense engines, and ship aftermarket parts and retrofit services.

Customers are spread across global shipowners, energy majors, North American utilities and data center operators, and infrastructure equipment buyers, which limits dependence on any single end market.

Competition differs by unit: in shipbuilding Samsung Heavy Industries and Hanwha Ocean are domestic rivals, with all three pursuing high-value vessel strategies, refining is a four-player domestic market, and power equipment faces global heavy-electric peers.

Non-shipbuilding affiliates have recently grown notably in both scale and quality, which is seen as the basis for the holding company sustaining large cash dividends.

Earnings trend

Quarterly revenue · Operating profit

₩17.2T₩1.1T25Q2₩18.2T₩1.7T25Q3₩18.7T₩2T25Q4₩19.6T₩2.8T26Q1₩22.4T₩4.1T26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩60.8T₩3.4T2022₩61.3T₩2T2023₩67.8T₩3T2024₩71.3T₩6.1T2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩17.2T	₩1.1T	6.6%
2025Q3	₩18.2T	₩1.7T	9.3%
2025Q4	₩18.7T	₩2T	10.5%
2026Q1	₩19.6T	₩2.8T	14.5%
2026Q2	₩22.4T	₩4.1T	18.4%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩60.8T	₩3.4T	₩1.4T	5.6%	18.8%	181.9%
2023	₩61.3T	₩2T	₩264.5B	3.3%	3.6%	192.6%
2024	₩67.8T	₩3T	₩509B	4.4%	5.9%	180.0%
2025	₩71.3T	₩6.1T	₩962.7B	8.6%	9.5%	159.4%

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

On confirmed figures, consolidated revenue expanded three years running, from KRW 60.85tn in 2022 to KRW 61.33tn in 2023, KRW 67.77tn in 2024 and KRW 71.26tn in 2025, while operating profit accelerated from KRW 2.03tn in 2023 to KRW 2.98tn in 2024 and KRW 6.10tn in 2025.

The operating margin bottomed at 3.3% in 2023 after 5.6% in 2022, then recovered to 4.4% in 2024 and 8.6% in 2025.

What stands out in the profit structure is the owners' share: of 2025 net profit of KRW 3.68tn, the portion attributable to owners was KRW 0.96tn, about 26%, and equity attributable to owners of KRW 10.12tn compares with non-controlling interests of KRW 20.22tn, a typical shape for a holding company with many listed subsidiaries.

Balance-sheet trends improved, with the debt-to-equity ratio falling from 192.6% in 2023 to 180.0% in 2024 and 159.4% in 2025, while 2025 operating cash flow of KRW 7.38tn stayed close to the KRW 7.51tn of 2024.

The quarterly path is even clearer: revenue rose for five straight quarters from KRW 17.21tn in 2Q25 to KRW 18.22tn, KRW 18.74tn, KRW 19.60tn and KRW 22.41tn in 2Q26, while operating profit climbed from KRW 1.14tn to KRW 1.70tn, KRW 1.97tn, KRW 2.83tn and KRW 4.12tn, lifting the quarterly margin from 6.6% to 18.4%.

Net profit attributable to owners also grew from KRW 0.12tn in 2Q25 to KRW 1.33tn in 2Q26, improving its share of total net profit.

Management attributed the gains to productivity gains and a higher mix of high-margin vessels in shipbuilding, better lubricant and petrochemical profitability in refining, distribution revenue growth and improved overseas profitability in power equipment, and new-model excavator and defense engine sales in construction machinery.

Notably, HD Hyundai Oilbank swung from an operating loss of KRW 241bn a year earlier to operating profit of KRW 1.82tn in 2Q26, and Mirae Asset Securities pointed to that refining improvement as the reason consolidated 2Q26 operating profit came in far above broker and market expectations — a margin tied to geopolitics, so its repeatability must be judged separately.

Industry analysis

The shipbuilding cycle is currently driven more by price and backlog than by volume.

The Clarksons newbuilding price index stood at 186.34 at the end of August, up 0.85 point month on month and 28% above the level of August 2021, with LNG carriers around USD 248.5m per vessel, VLCCs USD 131m and ultra-large container ships USD 254m.

Aggregate ordering, however, is widely expected to slow: the Export-Import Bank of Korea's overseas economic research institute forecast 2026 global newbuilding orders of 35m CGT, down 14.6% year on year, citing softer shipping markets, deferral of IMO environmental rules and shrinking container ship orders.

China's volume dominance is clear — of 4.2m CGT ordered globally in August 2026, Korea took 0.31m CGT for second place while China took 3.59m CGT for first. For January to August, China held 76% with 45.39m CGT versus Korea's 16% at 9.38m CGT, though Korea's cumulative intake was still up 55% year on year.

Korean yards are leaning harder into selective ordering, weighing price, profitability and delivery slots rather than volume, on the back of several years of work in hand.

Refining sits in a normalization phase after the first-half margin spike: Shinhan Securities said in a May 2026 note that second-half complex refining margins should run around USD 26 per barrel, above the USD 10 seen in 4Q25 before the conflict.

Power equipment is the unit with the most distinct cycle, as North American grid investment and demand for 765kV extra-high-voltage transformers, distribution transformer demand from data center buildouts, and demand for onshore generators for data centers amid a gas turbine shortage are all lifting orders.

Outlook

On confirmed order facts, HD KSOE said on its 2Q26 earnings call that its shipbuilding affiliates booked USD 16.38bn in the first half, or 96% of the annual order target, and that HD Hyundai Heavy Industries had already exceeded its own annual goal.

Subsequently, including four LPG carriers contracted in late August, cumulative intake reached 162 vessels worth USD 18.08bn, equal to 77.6% of the USD 23.31bn annual target (the two figures use different bases and are not directly comparable).

The company said a backlog of more than 500 vessels secures three and a half years of work and that a profitability-first strategy will continue in the second half, adding that while Middle East conditions and the global economy keep uncertainty elevated, structural demand from environmental rules, the energy transition and fleet replacement remains intact.

On capacity and new businesses, it is reviewing expansion of HiMSEN engine capacity from roughly 3GW to meet demand for AI data center power generation engines, is planning to specialize marine versus power engines across the Ulsan, Mokpo and new plants, and expects the HiMSEN share to rise from 2028.

A US unmanned surface vessel is being co-developed with defense firm Anduril, with the next order expected after next year following an initial demonstration.

In power equipment, an amended filing on 6 July 2026 raised the annual order target 22.8% from USD 4.222bn to USD 5.185bn, and a second North American plant is scheduled for completion in April 2027, with pre-emptive orders already flowing.

The ship services unit set out plans to strengthen high-value aftermarket competitiveness while targeting data center power generation engines and floating data center conversion.

On forecasts, Heungkuk Securities said in an April 2026 report that it expected HD Hyundai's 2026 consolidated revenue of KRW 80.34tn and operating profit of KRW 8.14tn, up 12.7% and 33.5% respectively.

Valuation

PER

6.2×

PBR

1.4×

ROE

25.2%

EPS

₩38,697

BPS

₩173,043

Dividend per share

₩4,000

HD Hyundai holds subsidiary stakes rather than running its own operations, so the market commonly compares the share price with the sum-of-parts value of those stakes.

Mirae Asset Securities said in a 3 August 2026 report that it raised its target price from KRW 245,000 to KRW 280,000 and kept a buy rating, lifting its net asset value estimate from KRW 28.73tn to KRW 33.04tn, noting unlisted units contributed about 40% of the increase, and naming HD Hyundai its top pick in the holding company sector.

Earnings-based multiples now sit lower than when they were calculated on pre-2024 profits, given how much profit has grown over the last four quarters, and the precise current values are best read from the live figures on the screen card.

That said, the owners' share of consolidated net profit has hovered around a third, and much of the profit comes from high-amplitude cyclical units such as refining and shipbuilding, which makes a simple comparison between the holding company's earnings multiple and those of its subsidiaries difficult.

On dividends, under a medium-term policy of paying out more than 70% of parent-basis net profit each year, the payout ratio rose from 33.82% in 2023 to 87.29% in 2024 and again exceeded 70% for 2025, while the quarterly dividend was raised from KRW 900 to KRW 1,300 as announced on the 1Q26 earnings call.

With the 10.5% treasury stake of 8,324,655 shares still awaiting a decision on cancellation, the total scale of shareholder returns will be set jointly by dividend policy and the treasury share decision.

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

Four Business Pillars Improving at Once

Second-quarter 2026 consolidated operating profit of KRW 4.12tn marked a fifth straight quarterly increase, with the quarterly operating margin widening from 6.6% in 2Q25 to 18.4%. Management said the result reflected solid performance across shipbuilding, construction machinery, refining and power equipment.

This is a period in which the cushioning effect of a diversified portfolio showed up in actual numbers. On an annual basis, the operating margin also climbed from 3.3% in 2023 to 8.6% in 2025 as profits recovered.

High-Price Backlog and Selective Ordering

The shipbuilding arm said a backlog of more than 500 vessels secures three and a half years of work. It attributed improved 2Q26 shipbuilding profitability to a higher mix of high-price vessels, productivity gains and more working days, while the newbuilding price index rose again to 186.34 at the end of August.

With a thick backlog, the conditions are in place to keep choosing contracts on price, profitability and delivery slots rather than volume.

A Different Cycle in Power Equipment and Gensets

HD Hyundai Electric raised its annual order target 22.8% from USD 4.222bn to USD 5.185bn in a July 2026 amended filing.

The rationale cited North American grid investment and 765kV extra-high-voltage transformer demand, distribution transformer demand from data center buildouts, and onshore generator demand for data centers amid a gas turbine shortage.

At group level, HiMSEN engine capacity expansion is under review as orders and customer enquiries increase. In short, a pillar with a different cycle from shipbuilding and refining is growing.

Bear factors

Durability of Refining Profits

Much of the 2Q26 improvement came from refining. HD Hyundai Oilbank posted operating profit of KRW 1.82tn amid heightened oil price volatility from Middle East conflict, swinging from a loss a year earlier.

But analysts have warned that a sharp oil price drop as geopolitical risk eases could turn inventory-related gains into losses, and Shinhan Securities projected second-half complex refining margins of around USD 26 per barrel in a May 2026 note, below first-half levels. If the refining contribution shrinks, the amplitude of holding company profits widens with it.

Slowing Newbuild Orders and Chinese Competition

The Export-Import Bank of Korea's research institute forecast global newbuilding orders of 35m CGT in 2026, down 14.6% year on year.

With container ship ordering expected to shrink, and containerships having accounted for roughly 57% of HD KSOE's merchant vessel results, diversifying vessel types has been flagged as a task. On market share, China held 76% of the global market in January to August versus Korea's 16%, a wide volume gap. The pricing and mix of new orders as the current backlog is consumed will drive future margins.

Profit Dilution from the Holding Structure

Of 2025 consolidated net profit of KRW 3.68tn, KRW 0.96tn or about 26% was attributable to owners, and non-controlling interests of KRW 20.22tn were roughly double the KRW 10.12tn attributable to owners.

This stems from consolidating core affiliates in which ownership is below half, such as 35.05% of HD KSOE and 37.18% of HD Hyundai Electric.

On dividend resources, Mirae Asset Securities noted that dividends from Oilbank are limited due to petrochemical restructuring, while suggesting improvement is possible once restructuring is done. How much of the subsidiaries' strength transfers to the holding company's own line must be checked quarter by quarter.

Risk factors

Oil Price, Refining Margin and Regulatory Risk

Refining results are directly tied to oil prices and refining margins. Analysts note that falling crude eases input costs but can create inventory valuation losses given advance crude purchases, and that prices can swing easily on geopolitics.

Domestic policy is another variable, with reports estimating cumulative industry losses of more than KRW 4tn related to the petroleum maximum price scheme. The company said it will keep pursuing alternative crude sourcing and flexible procurement in the second half.

Costs, FX and Order Execution

Shipbuilding is a long-contract business, so steel plate prices, labor costs and currency moves feed into delivery-period margins with a lag. The company said more working days and a higher average exchange rate helped in 2Q26, factors that could reverse if currency trends move the other way.

Defense and special vessels carry timing uncertainty, and the company said the next order for the US unmanned surface vessel is expected after next year. Capacity plans also need execution tracking, given that HiMSEN engine expansion remains under review.

Governance and Shareholder Return Rules

At the annual general meeting on 31 March 2026, the clause excluding cumulative voting was deleted, with the revised rules applying from the first shareholder meeting convened after 10 September 2026 to elect directors.

On returns, a year-end dividend was set but no additional measures such as treasury share cancellation were presented, prompting comment that the scope of the return policy is limited.

Commercial Act amendments impose an obligation to cancel treasury shares within a set period, but existing holdings receive a grace period and can be used further subject to shareholder approval. The eventual scale of shareholder returns will depend on when the rules settle and what the company chooses.

What to watch next

Late October to early November 2026
Third-quarter 2026 results and the earnings call. Key items are how far refining profit normalizes from first-half levels, whether shipbuilding margins hold as high-price vessels flow through revenue, and how the quarterly dividend is set.
September to December 2026
Progress against the USD 23.31bn annual order target — USD 18.08bn or 77.6% as of late August — and the vessel mix. It is also worth tracking LNG carrier ordering, which the market has flagged as the swing factor for hitting the target.
First director-election shareholder meeting after 10 September 2026
The timing and agenda of the first director-election meeting to which the revised rules on cumulative voting apply. Also worth watching is whether the company discloses a decision on the timing of cancelling its 10.5% treasury stake.
January to February 2027
Full-year 2026 results, 2027 guidance including affiliate order and revenue targets, and the year-end dividend decision. The focus is how the policy of paying out more than 70% of parent-basis net profit is applied on a much larger earnings base.
April 2027
Scheduled completion of HD Hyundai Electric's second North American plant. Completion timing, initial utilization and how quickly pre-booked orders convert to revenue will gauge the durability of power equipment growth.

Overall view

HD Hyundai's recent results reflect simultaneous profit growth in shipbuilding, refining, power equipment and construction machinery, with consolidated operating profit rising from KRW 2.03tn in 2023 to KRW 6.10tn in 2025 and, quarterly, from KRW 1.14tn in 2Q25 to KRW 4.12tn in 2Q26.

The operating margin improved from 3.3% in 2023 to 8.6% in 2025 and from 6.6% to 18.4% on a quarterly basis, while the debt-to-equity ratio fell from 192.6% to 159.4%.

Looking at composition, however, much of the 2Q26 upside came from refining, and brokers have projected second-half complex refining margins below first-half levels.

Shipbuilding offers high revenue visibility with three and a half years of backlog, but global newbuilding orders are forecast to fall in 2026, making new order pricing and vessel mix the variables for the next phase.

Power equipment is becoming a growth pillar on a different cycle, helped by a raised order target and the second North American plant due in April 2027.

From a holding company perspective, the two things to track together are the structural feature that only about a third of consolidated net profit has accrued to owners, and the interplay of the policy of paying out over 70% of parent-basis net profit with the review of cancelling the 10.5% treasury stake. This report is for information purposes and contains no buy or sell opinion and no 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.