South Korea’s Hyundai Heavy Industries Co. (HHI) stock has been drawing foreign interest after it turned into a pure-play shipbuilder and has seen improvement in ship orders due to revived global demand in the oil industry.

As of Monday, foreigners owned 11.62 million shares in the shipbuilder, or 20.51 percent. Before the demerger, their stockholding was 14.9 percent. Foreigners generally prefer holding-business structure as it improves the balance sheet and management efficiency.

Reviving global ship demand has added appeal to the stock on top of its reorganization.

Capital Group, a U.S. investment company overseeing $1.4 trillion in assets, increased its stake in HHI to 5.05 percent.

“Capital Group usually makes mid- to long-term investments. It would have bet on a turnaround in the shipbuilding industry,” said a market observer.

The improvement in order conditions, however, won’t immediately aid the income statement.

According to data provider FnGuide, HHI’s operating profit from April to December is estimated at 328.9 billion won ($292.9 million), down 4.4 percent from a year earlier. Estimates for next year’s operating profit are averaged at 325.3 billion won, down 34 percent from an estimate full-year profit of 2017.

But outlook for beyond is bright, given the flow in the order book.

Hyundai Heavy Industries and its two subsidiaries Hyundai Samho Heavy Industries and Hyundai Mipo Dockyard secured a combined 73 orders worth $4.2 billion in the first six months of the year, up six-fold in number of orders and four-fold in their value from the same period last year.

Of the 73, 61 were oil tankers. The group won 14 orders for very large crude carriers (VLCCs), grasping nearly half of total 27 VLCCs in global demand during the first half.

The shipbuilder is buoyant about the second-half demand as ship owners are showing signs of renewing orders for super-scale containers amid recovery in container freight fees.

Shares of HHI were relisted at 157,000 won on May 10 after the demerger. Its shares closed Wednesday at 170,000 won, up 1,500 won or 0.89 percent from the previous session.

By Yoon Jin-ho

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]