South Korean shipbuilding stocks showed a broad rally in early trading. The recovery in investor sentiment came as securities firms released analyses indicating the shipbuilding sector has entered an oversold phase.
As of 9:29 a.m. on the 17th, Hanwha Engine (082740) was trading at 51,700 won (approximately $37), up 3,650 won (7.60%) from the previous session. Offshore plant equipment maker TMC (217590) also rose 840 won (6.38%) to 14,000 won (approximately $10).
Major shipbuilders and equipment suppliers also showed broad strength. HD Hyundai Heavy Industries (329180) was trading at 461,000 won (approximately $330), up 20,500 won (4.65%) from the previous day, while HD Hyundai Marine Engine (071970) rose 2,250 won (4.62%) to 51,000 won (approximately $37).
Samsung Heavy Industries (010140) gained 800 won (3.96%) to 21,000 won (approximately $15), and HD Korea Shipbuilding & Offshore Engineering (009540) climbed 11,000 won (3.31%) to 343,500 won (approximately $250). Hanwha Ocean (042660) traded at 83,000 won (approximately $60), up 1,700 won (2.09%).
SK Securities diagnosed in a report released that day that shipbuilding stocks have entered a typical oversold zone. Analyst Han Seung-han stated, “The sharp decline in shipbuilding stock prices has pushed the 12-month forward P/E ratio to its lowest level since April 2023, when the upcycle began,” adding, “Combined operating profit is projected at 13.7 trillion won (approximately $9.9 billion) based on 2028 estimates, roughly double the previous peak.”
He continued, “Earnings capacity is actually strengthening through selective order-taking focused on high-margin vessel types and business diversification,” explaining, “We view this as a classic oversold phase where earnings are growing while multiples have contracted.” He added, “With solid fundamentals and new growth engines emerging beyond commercial vessels, a re-rating of shipbuilding stocks is possible,” maintaining an Overweight rating.
The shipbuilding sector has continued its earnings improvement this year with order backlogs at record highs, but stock prices have undergone corrections due to concerns over a global economic slowdown and exchange rate volatility. This securities firm analysis points out that the decline in share prices relative to earnings has been excessive, presenting a buying perspective.
The day’s rally extended beyond major shipbuilders to the broader shipbuilding value chain, including equipment suppliers and engine makers. The notable gains in Hanwha Engine and TMC are interpreted as the result of bargain-hunting inflows into small- and mid-cap stocks that had suffered steep declines.