Daewoo Shipbuilding Falls as Merrill Lynch Downgrades (Update1)
By Kyunghee Park
May 13 (Bloomberg) -- Hyundai Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co., two of the world's three largest shipyards, fell after Merrill Lynch & Co. lowered their ratings on concern of slower orders in the second half.
Hyundai Heavy, the world's largest shipbuilder, dropped 2 percent to close at 362,000 won in Seoul after Merrill Lynch cut the stock to a ``neutral'' from a ``buy.'' Daewoo Shipbuilding, the third-largest, slid 5.8 percent to 41,450 won. The stock is the fourth-worst performer among the 200 biggest companies in South Korea's Kospi index.
``It is just a matter of time before the shrinking global order pie starts affecting the order flow of Korean shipbuilders,'' analysts Sanjeev Rana and Chris Kim wrote in a report dated today. They also cited smaller-than-expected increases in vessel prices.
Shipyards in South Korea, the world's largest shipbuilding nation, won almost half of the $191.3 billion invested in new vessels last year. Hyundai Heavy and rivals have been increasing capacity as they work through almost four years of order backlog.
Samsung Heavy Industries Co., the world's second-largest shipbuilder, declined 1.7 percent to 38,400 won. Merrill Lynch kept the stock at a ``buy'' because of its offshore business.
To contact the reporter on this story: Kyunghee Park in Hong Kong at kpark3@bloomberg.net
Last Updated: May 13, 2008 03:12 EDT
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