On May 26, 2026, Hanwha Ocean and other major South Korean shipbuilding stocks saw dramatic surges on the KOSPI, driven by a potent mix of strong earnings, global order booms, and mounting anticipation over a massive Canadian submarine contract. Yet, beneath the surface of these headline-grabbing gains, analysts and investors are urging caution, pointing to one-off accounting boosts and sector risks that could temper the euphoria.
By mid-morning, Hanwha Ocean shares had soared as much as 12.52%, hitting 137,500 KRW, according to BusinessPost. Other sector heavyweights—Hanwha Engine, HD Hyundai Heavy Industries, HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Sejeon Heavy Industries—also posted notable gains, with increases ranging from 2% to nearly 5%. The KOSPI index itself jumped 3.28% to 8,106.24, while the KOSDAQ climbed 2.05% to 1,184.93, reflecting broad investor enthusiasm for the sector.
What’s fueling this rally? According to Choice Economy, the second half of 2026 is shaping up to be a pivotal period for Korean shipbuilders. Global new ship orders have exploded, with cumulative orders reaching 54.24 million gross tons (GT) as of April—a 62% jump from the previous year. Much of this surge has been led by rising demand for LNG carriers and higher-priced tankers and LPG ships. Notably, while Chinese shipyards have largely filled their construction slots through 2029, Korean firms still have capacity, making them well-placed to capture additional orders in the coming months.
But the real spark for Hanwha Ocean’s latest rally lies thousands of kilometers away in Canada. On May 23, the South Korean-built submarine Dosan Ahn Changho (SS-III) arrived at Esquimalt Naval Base in Victoria, British Columbia, following a remarkable 14,000 km voyage from Jinhae Naval Base in Korea. Canadian media outlets—including The Globe and Mail, CBC, and CTV—reported that a U.S. Navy sailor who joined the submarine for the Hawaii-to-Esquimalt leg praised its performance, calling it superior to Canada’s current fleet. This high-profile arrival has stoked optimism that Hanwha Ocean, in partnership with Germany’s ThyssenKrupp Marine Systems, could clinch the Canadian Patrol Submarine Project (CPSP): a massive deal to supply twelve 3,000-ton diesel submarines, with contractor selection expected as early as June.
The potential stakes are enormous. As IBK Investment & Securities analyst Oh Ji-hoon noted, the CPSP alone involves a 16 trillion KRW investment for new construction. “Winning the CPSP contract could boost the special ship business division’s performance and Hanwha Ocean’s stock price,” Oh said. He also highlighted that recent U.S. Navy plans to allow allied shipyards—including Korean ones—to build ship modules could open doors for even deeper cooperation with the United States in the future.
Hanwha Ocean’s recent financial performance has only added fuel to the fire. In the first quarter of 2026, the company posted consolidated revenue of 3.2099 trillion KRW (up 2.1% year-on-year) and operating profit of 441.1 billion KRW (up a staggering 70.6% year-on-year), with an operating margin of 13.7%. The shipping segment was the clear star, boasting an 18.0% operating profit margin—thanks in large part to revenue recognition from ships ordered since 2024, which now account for about 70% of sales. Tanker profitability also exceeded expectations, hitting low double-digit margins due to stabilized steel plate prices. However, the offshore plant segment continued to struggle, weighed down by fixed costs and reduced operating volume.
Yet, not everyone is convinced that the current numbers tell the whole story. According to PressNine, a significant chunk of Hanwha Ocean’s recent earnings—specifically, a 399 billion KRW tax benefit—was a one-time event. Experts warn that if such tax benefits fail to materialize again next year, and if core profit growth does not accelerate, reported profits could fall sharply. “There is concern that the current book profit might overestimate the company’s sustainable earning power due to the tax benefit,” one market insider told PressNine. They added, “Simple earnings figures including one-time items should not be used alone to assess sustainable profit levels, highlighting risks in profit margins and future growth prospects.”
Still, there are reasons for optimism. Hanwha Ocean’s earnings per share (EPS) growth over the past year has been substantial, and the company’s fundamental performance in the shipping segment is robust. According to Oh Ji-hoon, “Ongoing shipping segment improvements and US cooperation prospects make Hanwha Ocean an attractive investment.” He maintained a ‘buy’ rating on the stock and raised the target price to 141,000 KRW, though he cautioned that “short-term stock price volatility is expected around the June CPSP decision.”
Industry-wide, Korean shipbuilders have already secured 25 LNG vessel orders in 2026, with domestic firms expected to win most of this year’s contracts. As Han Seung-han of SK Securities explained, “Korean shipbuilders have secured 25 LNG vessels so far in 2026, with domestic companies expected to secure most LNG vessel orders for the year.” Ship prices are also forecast to rise in the second half, further buoying sector prospects. Meanwhile, increased offshore plant orders driven by ongoing global conflicts and the boom in AI data centers are seen as additional tailwinds. “Increased offshore plant orders due to war impacts and the rising trend of data centers are positive factors for the shipbuilding industry,” noted Choice Economy.
However, the sector is not without its vulnerabilities. While Korean shipbuilders enjoy some delivery capacity advantage over their Chinese rivals, the latter have already filled their slots through 2029-2030, signaling fierce competition for future orders. Analysts also caution that the rapid gains in ship prices and order volumes may not be sustainable indefinitely, especially if global economic conditions shift or if geopolitical tensions ease.
For now, though, all eyes are on the outcome of the Canadian submarine deal, set to be decided as early as next month. If Hanwha Ocean and its German partner win, it could mark a historic breakthrough for Korean shipbuilders in the global defense market, setting a new benchmark for export capability and technical prowess. If not, the sector may need to rely more heavily on continued strength in commercial shipping and emerging opportunities in offshore plants and AI-driven infrastructure.
As the dust settles from this week’s trading frenzy, investors and analysts alike are reminded that in shipbuilding—much like in the markets—today’s tide can turn quickly. The next chapter for Hanwha Ocean and its peers will be written not just by contracts and earnings, but by their ability to navigate both opportunity and risk on the global stage.