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HYUNDAI
Heavy Industries Co., the world’s largest shipbuilder,
led gains among South Korean yards in
Seoul trading after investors bet the companies would
overcome increased ship-plate prices to post higher
profits.
Hyundai
Heavy gained 3.8 percent to close at 384,000 won, the
highest in almost two weeks. Its unit Hyundai Mipo
Dockyard Co., the world’s fourth-largest shipbuilder,
climbed 5 percent to 243,000 won.
“Despite
higher plate prices, the effect on earnings could be
lower than expected because shipyards are currently
building vessels they won in 2005 and 2006 when ship
prices were at record levels,” said Feynman Jeon at
Daishin Securities Co. in Seoul.
He has
an “overweight” rating on the shipbuilding industry.
Dongkuk
Steel Mill Co.,
South Korea’s
third-largest steelmaker, will charge shipbuilders the
highest price in the country for the heavy plates used
to make hulls starting April 25.
Dongkuk,
which supplies about a third of the steel used by South
Korean shipbuilders, said Tuesday it will raise the
price by 23 percent to 1.01 million won a metric ton
because of rising costs.
Posco,
Asia’s third-largest steelmaker, raised ship-plate
prices by 18 percent to 785,000 won a ton from April 17.
Posco
and Dongkuk Steel are the only two steelmakers in South
Korea that produce plates used for vessels. The material
accounts for about 15 percent of annual sales at
shipbuilders.
“The
price increase may shrink operating profit margins for
shipbuilders by about 1.7 percentage points,” Jeon said.
“In some cases, operating profit margin could widen
because shipbuilders are building more vessels.”
Shipyards in
South Korea, the
world’s largest shipbuilding nation, have increased
production as they work through almost four years of
backlogs.
Samsung
Heavy Industries Co., the world’s second-largest
shipbuilder, climbed 3.1 percent to 34,950 won. Hanjin
Heavy Industries & Construction Co. rose 5.9 percent to
65,000 won. STX Shipbuilding Co. gained 6.2 percent to
38,650 won. (Bloomberg) |
