Hyundai Mipo Dockyard shares down 16% this year on poor Q4 earnings
Shares of South Korean shipbuilder Hyundai Mipo Dockyard Co. remain weak despite a rise in the stock prices of other shipbuilders this year as it has not been able to swing to a profit yet as it continues to complete low-priced orders won in the past.
Shares of Hyundai Mipo plunged 16.21 percent this year as of March 6. The decline is in contrast to how Daewoo Shipbuilding & Marine Engineering Co. gained 26.65 percent and Korea Shipbuilding & Offshore Engineering Co. 13.86 percent during the same period.
The sharp fall is blamed at poor performance.
Hyundai Mipo logged an operating loss of 54.7 billion won ($42 million) in the fourth quarter last year, falling short of market expectations that it will raise a profit of 20 billion won.
The outlook for the first quarter earnings is also gloomy.
Financial Market tracker FnGuide projected the shipbuilder to log an operating loss of 11.2 billion won for the January-March period. In January, it projected Hyundai Mipo to post a profit of 46.4 billion won in the first quarter.
The weak earnings come on low-priced orders Hyundai Mipo grabbed in the past.
The shipbuilder launched construction of the vessels for orders received in the first half of 2021. Many of the ships delivered are low-priced ones with low profitability.
Industry insiders note that 70 percent of the vessels built in the fourth quarter of last year were for low-priced orders.
“The vessel price of small- and mid-size ships Hyundai Mipo won in 2021 rose by a smaller margin than large-size ships,” said Lee Bong-Jin, an analyst at Hanwha Investment & Securities Co. “The vessel price will not likely recover significantly until the first half of this year.”
Hyundai Mipo, however, will be able to improve earnings in the second half as most of the low-priced vessels will be delivered this year. Samsung Securities expected that 82 percent of the low-priced vessel orders clinched in the first half of 2021 will be completed this year.