Reflecting both a lack of slot capacity and global economic concerns, KSOE has restrained its 2023 new order target to US$18.2bn. While somewhat conservative, we view this target as being realistic and well-achievable as the holding company navigates the current economic uncertainties, seeing plenty of opportunities for it to win commercial ship orders this year.

Positively view achievable 2023 order goals

Through fair disclosure made yesterday (Jan 3), Korea Shipbuilding & Offshore Engineering (KSOE) announced that it has set a 2023 new order target of US$18.2bn. By subsidiary, Hyundai Heavy Industries (HHI) and Hyundai Mipo Dockyard (HMD) upped their annual new order targets to US$11.9bn (+5% y-y) and US$3.7bn (+3% y-y), respectively. In lone contrast, Hyundai Samho Heavy Industries (HSHI) dropped its annual target 43% y-y to US$2.6bn. Based on the total amount for the three shipbuilders, the combined 2023 new order target for their shipbuilding (commercial, excluding specialty vessel) domains is US$13.3bn, down 12% from the 2022 target of US$15bn. But, the combined overall 2023 sales target for the three firms is W22.3tn, up 22% from last year.

While the order targets presented are conservative overall, we view them as being realistic. We see plenty of opportunities for the three firms to win commercial ship orders in 2023, and we again note that HHI and HMD’s order targets show y-y increases (albeit modest), with HSHI being the lone exception due to its lack of available dry dock space until 2026. All in all, the individual players’ order goals differ according to their construction capacity, and it does not appear unreasonable to anticipate that they will secure additional orders that will expand their order balances.

Elsewhere, Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME)’s 2023 order targets should remain roughly on par with (or slightly lower than) the 2022 figures due to backlogged orders for both LNGs and offshore plants (including FLNGs). The combined order target for KSOE, SHI, and DSME is US$32.7bn, down 7% from their combined 2022 target, but 2% higher than their total 2021 target.

LNG ship order momentum to be solid in 2023

We note that 163 large LNGCs were ordered in 2022. While global LNGC order volume will inevitably shrink in 2023, we expect orders for LNGCs related to Freeport, Port Arthur, Delfin, and ZFLNG to be confirmed, in addition to a second batch of orders for Qatar and Mozambique. With LNGC orders likely to reach about 85 ships in 2023, prices are to remain robust.

While LNGCs are set to lead the global shipbuilding order market in 2023, we believe that containership replacement demand (stemming from stricter environmental regulations), lofty charter fees, and historical-low order balances for tankers will also provide ample opportunities to attract orders. Although absolute global order amount will inevitably decrease again (following 2022) this year, ship types playing to the strengths of domestic shipbuilders are to be in demand, a factor which should provide plenty of chances to attract orders.

Source: Business Korea. The author is an analyst of NH Investment & Securities. He can be reached at ys.jung@nhqv.com — Ed.