Growing seaborne trade in oil products will generate demand for product tankers, auguring well for Hyundai Mipo Dockyard, an industry analyst has asserted.
HMD, a mid-tier South Korean shipbuilder, specialises in product tankers and medium LPG carriers.
In recent months, d’Amico and Scorpio Tankers ordered product tankers at HMD in anticipation of a growing oil products trade.
The availability of more cargoes from countries where refinery operations are expanding, coupled with refinery closures in other countries, should fuel seaborne trade.
CIMB Securities analyst KJ Hwang wrote, “On top of the rapidly surging delivery rate and weakening won, we see strong top-line growth prospects for HMD.
“The key catalysts remain the restart of PC tanker orders and still-firm prices, thanks to resilient charter rates, surging non-US refinery throughput, and low commodity prices (oil and steels).
Timecharter rates for MR tankers have surpassed the USD15,000/day mark amid a 25-year high in oil products’ seaborne trade.
Refineries worldwide continue to operate at near maximum levels to benefit from strong profit margins due to low oil prices. As oil-refining countries such as China and the Netherlands produce more oil products than they can consume, they are exporting the excess.
Hwang said, “While HMD stands out as the only listed Korean yard with visible top-line growth momentum year-to-date, we expect its delivery trend to stay on an uptrend along with the weak won (KRW-denominated contract prices are up about 14% year-on-year), implying sustainable revenue growth profile in 2H15-2016.”
He believes that HMD’s lack of exposure to the depressed offshore sector and falling steel prices will mean higher profit margins.
Hwang predicts a full-year profit of KRW60.7 billion for HMD, reversing a 2014 loss of KRW679.26 billion.