Shares of HD Hyundai Group affiliates are rallying after the companies unveiled large-scale investment plans targeting next-generation growth businesses. HD Hyundai Heavy Industries said it will spend more than 1 trillion won to expand production bases for large power-generation engines and small modular reactors, or SMRs. Analysts said the plans exceeded market expectations, drawing a rush of investor demand.
HD Hyundai Heavy Industries (329180.KS) was trading at 482,000 won as of 2:11 p.m. on the 11th, up 6.28% from the previous session, according to the Korea Exchange. HD Hyundai Marine Solution (443060.KS), an engineering services provider under the group, jumped 6.54%, while HD Korea Shipbuilding & Offshore Engineering (009540.KS) rose 4.41%. HD Hyundai Marine Engine (071970.KS) gained 2.72% and holding company HD Hyundai (267250.KS) advanced 2.24%.
HD Hyundai Heavy Industries announced the investments a day earlier. The company will invest 833.6 billion won to build a new production base in Ulsan for its HiMSEN engine. It also plans to spend 238.6 billion won on a dedicated plant for SMR main components at its Ulsan shipyard site. The HiMSEN engine, developed with HD Hyundai's proprietary technology, is used widely in large vessels as well as in power plant infrastructure. Results in the data center business are becoming visible, with the company recently signing supply contracts worth 1.583 trillion won with U.S. companies.
Securities analysts said the group's investment blueprint exceeded market expectations, arguing that the bold bets on high-growth businesses will expand medium- and long-term earnings and create momentum for share prices. Korea Investment & Securities set a target price of 1 million won for HD Hyundai Heavy Industries in a report, naming it the top pick in the shipbuilding sector.
"The decision to invest in facilities for 4 gigawatts of high-output power-generation engines and two units of fourth-generation SMR main components exceeded market expectations in both scale and substance," said Kang Kyung-tae, an analyst at Korea Investment & Securities. "On the assumption that the new 4-gigawatt engine production facility runs at full capacity, annual revenue in the engine and machinery division will reach 10 trillion won by 2030."
