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In the world of shipbuilding, South Korea has firmly positioned itself as a global leader, driven by a strategic combination of digitalization, green technology, and a commitment to manufacturing high-value-added vessels. As of October 2023, shipbuilding companies in South Korea secured a remarkable 62% of the total global orders, surpassing their Chinese counterparts.
This development can be attributed to sustained efforts in manufacturing top-tier vessels, coupled with extensive support from the government. Now, with a vision for the future, South Korea is charting a course towards autonomous shipping to establish a competitive advantage over other nations in the industry.
Beyond autonomous shipping, South Korean shipbuilders are strategically exploring opportunities in North America, particularly in the naval sector.
Investing in South Korea’s shipbuilding companies
For investors, we list down stocks of four shipbuilding companies in South Korea. These companies boast decades of experience in the industry, contributing significantly to enhancing the country’s standing in advanced ship manufacturing and maritime engineering.
HD Hyundai Heavy Industries
Headquartered in Ulsan, HD Hyundai Heavy Industries is one of the largest shipping conglomerates in the world. The company not only manufactures ships but also offers marine solutions like ship lifecycle maintenance and ship propulsion systems. The firm, established in 1972, also focuses on building more efficient and sustainable ships by integrating AI analytics and other advanced technologies.
Earlier this week, HD Hyundai announced a partnership with Google Cloud to integrate generative AI technology into its shipbuilding sectors, aiming to enhance smart shipyard operations.
In 2022, the company’s sales climbed 8.8% year-on-year to 9.045 tn won ($7.03 bn) on the back of increased sales. During this period, the company’s operating loss also narrowed to 280.9 bn won ($220 mn) from 800.2 bn won ($620 mn) in 2021.
Stocks of Hyundai Heavy Industries are listed on the Korea Stock Exchange (KRX: 329180). The company has a market cap of 11.43 tn won ($8.9 bn). Since last year, the company’s shares have edged up 0.25%, and over the past five years, it has surged 15.43%. Hyundai Heavy Industries has a PE ratio of 34.60 and a price-to-book ratio of 2.11.
HD Korea Shipbuilding & Offshore Engineering
HD Korea Shipbuilding & Offshore Engineering is the holding company of HD Hyundai Heavy Industries. It manufactures high-value-added gas carriers, sophisticated vessels, general merchant ships, and offshore vessels. The company also supplies large and mid-sized ship shipbuilding engines. Korea Shipbuilding is headquartered in Seoul and operates in North America and Europe, besides Asia.
The company recently signed an agreement for four massive ammonia carriers (VLACs) with a European shipping company scheduled to be delivered by the second half of 2027. Besides, Korea Shipbuilding is turning to ammonia as the next-generation environment-friendly fuel.
The company’s revenue climbed 11.7% year-on-year to 17.3 tn won ($13.44 bn) in 2022. During the same time frame, Korea Shipbuilding saw its operating loss shrink to 352.3 bn won ($0.27 bn) from 1.384 tn won ($1.08 bn) in the preceding year.
Korea Shipbuilding & Offshore Engineering reported this month that they have achieved nearly 140% of their annual shipbuilding target, which is worth $15.7 bn.
The company’s stocks are listed on the Korea Stock Exchange (KRX: 009540). Korea Shipbuilding & Offshore Engineering has a market capitalisation of 8.549 tn won($6.6 bn). The company’s stock has surged 52.52% in the past year. It has a PE ratio of 54.91 and a price-to-book ratio of 0.82.
Hanwha Ocean
Formerly known as Daewoo Shipbuilding & Marine Engineering, Hanwha Ocean manufactures offshore structures and ships. The company focuses on tankers and fleets for transporting crude oil and other refined petroleum products. It also supplies to oil and gas exploration and production industries in Europe and America.
In August, Hanwha Ocean announced a big rights offering of 2 tn won ($1.5 bn). The funds are earmarked for the expansion of its defence-related business, with a specific focus on the warship and surface combatant segments.
Last year, Hanwha Ocean saw a year-on-year revenue increase of 8.3% to 4.86 tn won ($3.77 bn). Additionally, the company’s operating loss for the year widened to 1.60 tn won ($5.25 bn) from 1.573 tn won ($1.22 bn) in 2021.
As of March 31, 2023, Hanwha Ocean has a fleet of 1,256 commercial ships and 108 offshore & plant vessels. According to a local business daily, Hanwha Ocean aims to achieve 30 tn won in sales and 5 tn won in operating profit by 2040.
Hanwha Ocean has a market cap of 7.689 tn won ($6 bn) and is traded on the Korea Stock Exchange (KRX: 042660). The company’s shares have soared 35.64% since last year. It has a price-to-sales ratio of 0.57 and a price-to-book ratio of 2.86.
Samsung Heavy Industries
As a diversified entity, Samsung Heavy Industries is involved in shipbuilding and production facility development. Apart from this, the company also partakes in activities related to digital shipbuilding system development. Crude oil tankers, bulk carriers, container vessels, drill ships, and material handling equipment are some of the things they manufacture.
Samsung Heavy Industries announced this month that it has secured a deal worth 310.8 bn won ($240 mn) with an Oceania-based shipping company. The deal entails building two massive ammonia carriers (VLACs) scheduled to be delivered by June 2027.
Samsung Heavy Industries witnessed a 10.2% year-on-year decline in its revenue, reaching 5.944 tn won ($4.62 bn) in the fiscal year ended December 2022. During the same period, the company’s operating loss narrowed to 854.4 bn won ($0.66 bn) from a loss of 1.311 tn won ($1.02 bn) in 2021.
The company’s stocks are listed on the Korea Stock Exchange (KRX: 010140) with a market capitalisation of 6.619 tn won ($5.1 bn). The company’s stock has climbed by 44.79% in the past year. Furthermore, the shares of Samsung Heavy Industries have a price-to-sales ratio of 0.90 and a price-to-book ratio of 1.66.
Editor’s note: All stock movement figures as of December 28, 2023.
