[KOSPI Story] Analysis of HD Korea Shipbuilding & Offshore Engineering (009540) Earnings Rally Scenario with Benefit of 1,541 Won High Exchange Rate and Three-Year Backlog of 'Dock Pool' Orders

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Key Summary

• As of early June 2026, HD Korea Shipbuilding & Offshore Engineering (HD KSOE) recorded cumulative orders of 123 vessels worth $14.17 billion, achieving approximately 60.8% of its annual order target ($23.31 billion) and accelerating its order rally late in the first half.
• Fully enjoying the benefits of the high exchange rate of 1,541.90 won, the company renewed its record-high operating profit margin of 16.7% (operating profit of 1.356 trillion won) in Q1 2026. Securing three years of stable work, its selective order strategy focusing on high-priced vessels is bearing fruit.

Current Status Summary

• On June 25, 2026, the KOSPI market closed at 8,930.30 points, and the USD/KRW exchange rate remained high at 1,541.90 won.
• On that day, the closing price of HD KSOE (009540) rose 1.77% from the previous day to 374,500 won, proving robust buying flow from institutional and foreign investors for large-cap shipbuilding stocks.

• According to Daily Stock's proprietary Fear & Greed Index, KOSPI Fear & Greed maintained a neutral status at 53.8, while Nasdaq Fear & Greed entered the fear stage at 26.
• Amid expanding volatility in global tech stocks, expectations are rising that liquidity may disperse into performance-driven stocks like the Korean shipbuilding industry.

• As of early June 2026, HD KSOE has already secured orders for more than 120 vessels (including 16 LNG carriers, 28 container ships, and 36 LPG/ammonia carriers), securing high visibility for achieving this year's target early.

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Financial Analysis

• In 2025, HD KSOE achieved consolidated revenue of 29.9332 trillion won and an operating profit of 3.9045 trillion won, marking its best performance since foundation.
• Subsequently, in its Q1 2026 earnings release, the company reported revenue of 8.1409 trillion won and an operating profit of 1.356 trillion won, significantly beating market consensus.

• As the construction of high-priced eco-friendly vessels ordered earlier began in earnest and revenue recognition accelerated relative to working days through process optimization, the company established an unusually high-margin structure with an operating profit margin of 16.7%.

Valuation

• As of June 25, 2026, HD KSOE's market capitalization stands at approximately 26.53 trillion won (based on a stock price of 374,500 won).
• The 12-month forward Price-to-Earnings (P/E) ratio is around 13x, and the Price-to-Book (P/B) ratio is at the 2.2x level. Solid earnings growth supports the upper end of the multiple despite the upward trend in the stock price.
• Although this value represents a slight premium compared to the average of KOSPI's large manufacturing companies, it is considered a reasonable evaluation scenario given its monopoly status in global LNG and ammonia carriers and the reliability of converting the three-year secured order backlog into earnings.

Expert and Institutional Analysis

• Analysts at major securities firms analyze that "The rally in orders for gas carriers and eco-friendly merchant ships continues in 2026, ending concerns over a peak-out of shipbuilding stocks."
• In particular, the USD/KRW exchange rate remaining above the 1,540 won level acts as a powerful weapon to widen additional margin spreads due to foreign exchange gains, given the nature of the shipbuilding industry where export payments are received in US dollars.
• Additionally, entry into the US Navy MRO (Maintenance, Repair, and Overhaul) market and concrete localization of global investments are cited as catalysts that could further level up the book value per share.

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Risk Factors

• A recent serious industrial accident at its subsidiary HD Hyundai Samho shipyard could act as a short-term risk due to strengthened safety regulations and the possibility of schedule delays caused by temporary work suspensions.
• Conditional risks also exist, such as volatility in negotiating raw material prices (like domestic and foreign heavy plate prices) and high global benchmark interest rates, which could raise ship financing costs for shipowners and lead to a slowdown in new order inquiries.
• Furthermore, if the Bank of Korea delays interest rate cuts and the USD/KRW exchange rate rapidly turns toward Korean won appreciation (sharp decline in the exchange rate), won-denominated revenue and margin spreads could partially contract.

Investment Perspective Summary

• Based on its overwhelming dock order backlog equivalent to three years of work, HD KSOE has escaped the low-price order competition of recessionary periods and successfully established a high-priced sales strategy through strict selective orders.
• As the high exchange rate of 1,541.90 won is maintained in the macroeconomic environment and its earnings certainty stands out among KOSPI large-caps, it is highly likely to function as a solid alternative portfolio against the highly volatile tech-centric market.
• However, a cautious, installment-based approach focusing on the sustainability of the mid-to-long-term supercycle while closely monitoring short-term accidents and cost fluctuation issues seems effective at this point.

Investor Checklist Q&A

1. Q. Are the current order backlog level and future workload secure?

A. Securing about three years' worth of work (including a cumulative 123 vessels) as of early June 2026, future revenue visibility is outstanding.

1. Q. How does the high exchange rate of over 1,540 won affect earnings?

A. Since most shipbuilding payments are settled in dollars, the high exchange rate trend is positive for improving operating profit by generating foreign exchange gains and boosting won-denominated revenue.

1. Q. What is the main secret behind the Q1 2026 surprise earnings?

A. It is the combined result of an increased construction share of high-priced LNG and eco-friendly gas carriers, stabilization of the cost structure, and the high exchange rate effect.

1. Q. What macroeconomic indicators should we focus on regarding the shipbuilding industry?

A. Key indicators include Korea's export/import trends, USD/KRW exchange rate movements, and whether the Newbuilding Price Index continues to rise.

1. Q. Does the recent serious accident at the subsidiary have a significant impact on the stock price?

A. Although there may be short-term psychological contraction and temporary work restrictions, the prevailing scenario suggests that the possibility of damaging the mid-to-long-term order fundamentals themselves is limited.