Two fresh orders boost flagging Hyundai Heavy

Company holding out for fourth-quarter spurt of multi-billion-dollar deals


Hyundai Heavy Industries, the world’s largest shipbuilder, is gaining momentum to put its shipbuilding business back on track after winning two large-scale orders worth a combined $3.5 billion.

On Wednesday, the ship manufacturer announced that it won a $270 million order to build one LNG Floating Storage Regasification Unit, or FSRU, for HEGH of Norway.

The onshore facility, which can transit LNG from carriers and transfer the gas through the oceanic channels, is scheduled to be delivered to HEGH in early 2015, it added. 

In addition, the company is anticipating a signing ceremony with the state-run Saudi Electricity to close a $3.2 billon power plant building deal after being selected as a preferred bidder at the end of last month.

If the deal is sealed, the Korean company will construct a thermal power plant in Jedah over the next four years for Saudi Electricity. Market watchers predicted that Hyundai Heavy would be able to wrap up the deal soon as the company was reportedly the bidder with the lowest price.

The deal with Saudi Electricity is likely to come in time to end the drought at the company. The company has lagged behind Daewoo Shipbuilding & Marine Engineering, or DSME, the world’s second largest shipbuilder, in the race to win ship and offshore plant building orders for the past nine months. As of Oct. 5, the accumulated order amount of DSME reached $10.4 billion, while that of Hyundai Heavy posted $8.2 billion.

Industry watchers said it is too early to say who will be the final winner in the race as Hyundai Heavy holds out for a last minute spurt in the fourth quarter.

“The company is joining a few bids for multi-billion-dollar ship and plant building projects and some of them will be closed by the year-end,” a company official said, adding that the company is making all-out efforts to meet its annual order target of $24 billion.

Market watchers are divided on the fourth-quarter performance of Hyundai Heavy Industries. Hanwha Investment & Securities stayed positive, listing up multi-billion dollar projects that the company has joined, including a $4 billion Abu Dhabi offshore project and $3 billion Nigeria project.

Sung Gi-jong from KDB Daewoo Securities also agreed that Hyundai Heavy would outperform other shipbuilders in the fourth quarter. However, he emphasized the importance of the quality of the deal.

“Gaining profit from a deal is a different story from winning a deal. Investors can turn their eyes from Hyundai Heavy if the company wins an order offering the lowest price.

Both analysts took the same line regarding the outlook for the shipbuilding industry currently in a slump, saying direction of the industry would follow the crisis in the eurozone.

By Seo Jee-yeon (jyseo@heraldcorp.com)