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News of LNG ships sends shipbuilders higher on Seoul bourse

All News 14:30 June 02, 2020

By Nam Kwang-sik

SEOUL, June 2 (Yonhap) -- South Korea's listed shipbuilding companies, including Samsung Heavy Industries Co., enjoyed soaring share prices Tuesday morning on the Seoul bourse on news of a liquefied natural gas (LNG) ship deal in Qatar.

The country's three largest shipbuilders -- Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. -- singed a combined US$19.2 billion deal on June 1 with Qatar Petroleum to reserve their LNG ship construction capacity for Qatar Petroleum through 2027, the Middle Eastern country's state-run petroleum company said.

The preliminary deal to build LNG ships is expected to lead to the securing of more than 100 LNG carriers in the near future, the Qatari energy company said.

This photo shows Korea Exchange's corporate logo atop its building in western Seoul. (Yonhap)

Shares of Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering skyrocketed more than 15 percent in Tuesday morning trade.

Hyundai Heavy Industries Holdings Co. stayed in the positive terrain after a strong start.

In addition, Hyundai Heavy Industries' intermediate holding firm Korea Shipbuilding & Offshore Engineering also traded higher Tuesday morning.

"Considering (this is) a time when new orders of local shipbuilders tumbled on COVID-19, the deal is sure to be a project like welcome rain for shipbuilders," said Jung Ha-neul, an analyst at Korea Investment & Securities Co., in a report released Tuesday morning.

However, Jung Dong-ik, another analyst at KB Securities Co., said in a recent report that the impact of the deal will be limited on earnings and share prices of shipbuilders in the short term, as the deal is involves a long-term project to be completed by 2027.

ksnam@yna.co.kr
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