Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Shipbuilders and shipyards -- Ignore unavailable to you. Want to Upgrade?

To: Lynn who wrote (46)	5/19/2008 8:23:25 AM
From: Lynn	Read Replies (1) \| Respond to of 61

Korean Shipbuilding Industries Bull Driver No 2: KRW Depreciation 18 May 2008 11pages * Slow moving shipbuilding prices- Actually a big rally - Contrary to market expectation, shipbuilding prices moved amazingly fast YTD on a KRW basis. As the Won depreciated by 11.4% YTD against the USD, or 12.8% YoY, KRW-denominated shipbuilding prices moved up 10~18% YTD, or 15~28% YoY. * W162bn VLCC price from W128bn in 07 - The strongest rally is from VLCC. VLCC price soared to W162bn from an average W128bn in 2007, up W34bn. VLCC requires 45,000 tons of steel, and the recent W200,000 steel price hike (30% YoY) requires W9bn in additional costs, but the shipbuilding price rallied more than W30bn. We expect W170bn contracts to come in the near term. * W53bn 37K DWT PC tanker up from W42bn in 2007 - Mipo reported 6 PC tanker contracts earlier this week at 27% YoY higher prices on a KRW basis. * Locking in profit - Hyundai Heavy and Hyundai Mipo used to cover 70~75% of their currency exposures, but they increased the coverage ratio to 88~90% recently to lock-in the benefit of Won depreciation. * Bigger upside than revaluation loss - Most Korean shipbuilders had currency hedge revaluation loss in 1Q08, but just in accounting terms that can be reverted as a gain with won appreciation. Instead, we see bigger upside from new contracts at higher prices. New orders in 2008E are bigger than their current currency hedge positions.