Solid OPM without one-offs: Hyundai Mipo reported revenue of KRW861.2bn(-18.5% y-o-y) and operating profit of KRW27.9bn in 2Q17 (-62.3% y-o-y). The salesdecline was mainly attributable to a drop in shipbuilding activities amid orderbacklogs depletion (vessels under construction: 82k tonnes in 2Q17 vs. 100k tonnesin 2Q16). OPM contracted by 3.8ppt to 3.2%, due to 1) lower sales contribution fromLPG carriers; 2) one-off items including severance pay at KRW8.3bn and DSMEbond related losses of KRW22.6bn at Hi Securities. Without one-offs, its OPM wouldhave been at 6.8%. Gains from Hyundai Robotics shares disposal (KRW312.8bn, nettax) was partially offset by impairment losses from Hi Investment & Securities stakes(KRW282.8bn), but it was more than enough to lift net profit, by 36.4% y-o-y.    MR tanker outlook: In terms of new orders (new orders up to June reachedUSD1.5bn vs. USD156mn a year earlier, +867% y-o-y), Mipo guided that its producttanker enquiries are picking up while the demand for LPG carriers seems to beslowing. The company expects better new order inflows in 2H17 (currently undernegotiation with Japanese ship-owners to secure new orders) given its dominantposition in the MR tanker market with more than 40% market share. Despite a lowerpricing offering by the Chinese yards, we think Mipo is the best positioned to capturestrong orders with its technological superiority and proven track record of operationalefficiency. In terms of pricing, it would not be easy to apply the same hike givencustomisation of each vessel, but Mipo thinks that the pricing for MR tanker hasimproved 10% in 2017 and expects further price hikes in 2H17.    Raise our TP to KRW140k from KRW120k. Under our SOTP valuationmethodology, we now reflect the increase in HMD’s stake value of recently demerged3 entities (Hyundai Heavy, Hyundai Construction and Hyundai Electric) frompre-merger Hyundai Heavy stake value. In addition, we apply net cash-in amount(+KRW350.3bn) to our estimated net debt resulting from disposal of HyundaiRobotics stake in June, while we adjust the value of non-listed securities toKRW475bn after reflecting impairment loss of KRW282.8bn on Hi Securities (seeExhibit 2 on page 3 for details.)Preferred pick in the sector: We maintain our Buy rating. We believe Hyundai Mipois well positioned to absorb the increase in tanker demand and maintain No.1position in the product tanker market in both product and cost competiveness.    This report replaces that of the same title and date to correct the new orders growthnumber in the second bullet point. Please disregard the version previously distributed

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