A sector analyst has urged investors to be cautious when buying the stocks of Daewoo Shipbuilding & Marine Engineering (DSME), advising them to do so only after South Korea’s third-biggest shipbuilder announces its earnings for the second quarter of 2015.
Samsung Securities analyst Han Young-Soo made this assessment after DSME CEO Jung Sung-Leep suggested the shipbuilder would continue its loss-making streak for the second quarter.
Han said Samsung Securities believe DSME is unlikely to make a premium, given concerns over
second quarter earnings, and delayed improvements to financials for drilling rig delivery delays.
Reflecting these and forecast cuts, Han lowered his six-month target price for DSME’s stock by 17% to KRW18,000 (USD16).
The stock is currently trading at KRW13,800.
Still, Han thinks DSME’s stocks are a good buy in the medium term as the shipbuilder’s profitability should improve in the long term for an improving product mix, especially a rising portion of LNG carriers in its orderbook.
In addition, DSME’s outstanding orderbook is the largest among South Korea’s listed shipbuilders.
Han concluded, “We see the period following the release of second quarter results – and dissipation of related uncertainties – as a good entry point.”
This post was sourced from IHS Maritime 360: View the original article here.
