Korean Shipbuilding sector

1. Macro economic situation

Macro economic situation set very positive mometum to Shipbuilding sector.

There are enough factors which bring good performance to Shipbuiliding companies.

High Oil price which would leads to increases of demand and price of oil-tankers and offshore plants.

Economic recoveries of Europe and Middle-east actualize this.

2. The situation of the sector in Korean market

Even if Samsung Heavy Industries(010140.KS) couldn't get more contraction in fianacial statements, the more contractions are under the negotiations.

Korean Shipbuilders have competitive edge in Oil & Gas ships against Chinese builders.

Equities of Korean Shipbuilders are good enough in perspective of stock market too.

It has been one of the best sectors after Korean Summit.

3. Potential risk of possible hided losses

Korean Shipbuilders got severe injuries with a few KRW Trillions loss from manufacturing offshore plant.

The losses in the time doesn't end yet, it would be continued during at least 2 years.

The losses sat limit to shareprice, and led to plunge a few time, but looks like end.

Hyundai Heavy Industries(009540.KS) plunged end of 17 from capital increase, but recoverd the plunge fast.

Samsung Heavy Industries(010140.KS) and Daewoo Shipbuilding & Marine Equpiment(042660.KS) also plunged, but they are doing good more or less in now.

Additional unexpected loss from the plant could be risk factor for the companies.

4. Opportunities with competitive edge of the companies and macro situation

But the loss gave the companies competitive edges, upgrading their manufacturing know-how.

Chinense shipbuilders couldn't enter into offshore plant manufacture easily because they saw Korean shipbuilders almost went to bankrupcy.

They don't have the technology to manufacture the plants.

Korean Shipbuilding sector could be one of the best recipient for recovery of global real economy, specially Europe.

If you believe that the discount of Korean market could be solved with progress of North Korea Problem, the Shipbuilders could be the best choice.