Daewoo Shipbuilding shares drop on order cancellations
Daewoo Shipbuilding & Marine Engineering Co., the world's third-largest shipyard, led declines among South Korean shipyards on Monday over concerns about more order cancellations, analysts said. Daewoo Shipbuilding dropped 12.39 per cent to 36,050 won (US$35.4) on the Seoul bourse as of 10:45 a.m. after it said last Friday its client failed to make pre-payment for a 619 billion won order to build eight container ships Hyundai Mipo Dockyard Co., a unit of Hyundai Heavy Industries Co., the world's largest shipyard, sank 7.59 per cent to 182,500 won after it said on the same day it had cancelled a 197 billion won order for four product carriers.
"Investors are worrying that more order cancellations may come in the future as shipping companies are facing difficulties in funding due to the global credit crunch," said Yoon Phil-choong, an analyst at Samsung Securities.
Hyundai Heavy also dropped 9.59 per cent, and Samsung Heavy Industries Co. (KSE:010540), the world's second-largest shipyard, also plummeted 8.17 per cent.
Shipyards in South Korea, the world's largest shipbuilding nation, have enjoyed a heyday in recent years as global shipping lines bet on rising trade led by China. Also, soaring oil prices are increasing demand for offshore drilling structures and oil tankers.
Hyundai Heavy received $19.8 billion in orders for ships, offshore platforms and other products in the first six months, 62 per cent more than a year earlier.
Samsung Heavy won $10.3 billion in orders so far this year, achieving 66 per cent of its annual target of $15.5 billion. That increased the backlog to $46 billion, or about four years of work, it said.
On the back of increased orders for high-priced ships, Hyundai Heavy and other local shipyards posted record profits in the second quarter of the year.
Hyundai Heavy's net income rose 57 per cent to 655.2 billion won. Samsung Heavy's profit jumped 24 per cent to 168.3 billion won.
"The order cancellations are definitely bad news for South Korean shipbuilders... but not so much for their bottom line as for investor sentiment," said Chung Dong-ik, an analyst at CJ Investment & Securities Co.
"Investors are worrying that more order cancellations may come in the future as shipping companies are facing difficulties in funding due to the global credit crunch," said Yoon Phil-choong, an analyst at Samsung Securities.
Hyundai Heavy also dropped 9.59 per cent, and Samsung Heavy Industries Co. (KSE:010540), the world's second-largest shipyard, also plummeted 8.17 per cent.
Shipyards in South Korea, the world's largest shipbuilding nation, have enjoyed a heyday in recent years as global shipping lines bet on rising trade led by China. Also, soaring oil prices are increasing demand for offshore drilling structures and oil tankers.
Hyundai Heavy received $19.8 billion in orders for ships, offshore platforms and other products in the first six months, 62 per cent more than a year earlier.
Samsung Heavy won $10.3 billion in orders so far this year, achieving 66 per cent of its annual target of $15.5 billion. That increased the backlog to $46 billion, or about four years of work, it said.
On the back of increased orders for high-priced ships, Hyundai Heavy and other local shipyards posted record profits in the second quarter of the year.
Hyundai Heavy's net income rose 57 per cent to 655.2 billion won. Samsung Heavy's profit jumped 24 per cent to 168.3 billion won.
"The order cancellations are definitely bad news for South Korean shipbuilders... but not so much for their bottom line as for investor sentiment," said Chung Dong-ik, an analyst at CJ Investment & Securities Co.