Samsung Heavy Industries Is 'Offshore Data Centers,' HD Hyundai Is 'Power'... AI Order Strategies Diverge

Summary

Eom Kyung-ah, Research Fellow at Shinhan Investment & Securities, reviews the shipbuilding sector and the new AI/data center demand story. She argues conventional shipbuilding orders and earnings remain strong but are not being reflected in stock prices, while new data center power engines and floating data centers could become high-margin markets. Samsung Heavy Industries is positioned as the floating data center first mover, and HD Hyundai Heavy Industries is positioned on the power/fuel cell side. She also covers Korean shipping stocks and the long-term US military shipbuilding opportunity.

• Conventional commercial shipbuilding orders and earnings remain strong but no longer act as major stock catalysts.
• US data center grid constraints are creating demand for ship power engines as distributed power, benefiting Korean shipbuilders.
• Samsung Heavy Industries is positioned as the first mover in floating data centers through a US developer partnership.
• HD Hyundai Heavy Industries is pursuing the data center power side by internalizing fuel cell and power engine capabilities.
• Power engine parts suppliers may benefit from volume growth tied to data center power engine orders.
• Korean shipping stocks are supported by high freight rates and stronger quarterly earnings.
• US military shipbuilding demand is a real but slow-moving long-term opportunity for Korean yards.
• Short-term Q3 shipbuilder earnings could be held back by FX and weather, but the long-term order and earnings story remains intact.