Hyundai Heavy Industries Co., South Korea's leading shipbuilder, is expected to see its business slump continue throughout the first quarter of the year, largely due to weak demand for new ships, analysts said Friday.

On Thursday, the world's largest shipyard said its 2012 earnings dropped 62 percent to reach 1.04 trillion won (US$953 million) as it built low-priced ships.

Sales gained 2.35 percent on-year to 54.97 trillion won last year, while operating income dropped 56.3 percent on-year to 1.99 trillion won, it said.

In the fourth quarter of last year, the shipbuilder suffered a loss of 348 billion won, and its operating profit plunged 94 percent on-year to 54.3 billion won, due to a loss from equity ties with affiliates and decreased operating income.

"(Hyundai Heavy's earnings) are a real shock for the market," said Lee Jae-won, an analyst at Dongyang Securities. "The shipbuilding business is seeing its profitability decline at a sharper than expected pace."

The world economy is showing a better-than-expected recovery, and the shipbuilder may report an improvement in its business results down the road, according to the analyst.

"But we don't need to be in a hurry to buy (Hyundai Heavy)," the analyst said cutting the target price on Hyundai Heavy by 7 percent to 250,000 won.

Kang Seok-hun, an analyst at KDB Daewoo Securities, said the shipbuilder will continue to suffer a drop in new ship orders during the first quarter of the year.

"Hyundai Heavy may fail to achieve half of its annual order target in the first six months of the year," Kang said, adding that it is unlikely for the shipbuilder to win massive orders this year.

The analyst also trimmed the target price on Hyundai Heavy by 7.1 percent to 260,000 won.

The shipbuilder earlier said it was targeting to win orders valued at $29.7 billion this year, compared with last year's $19.57 billion, on the back of an uptick in the global economy.

Shares of Hyundai Heavy were trading at 203,500 won on the Seoul bourse as of 9:15 a.m., down 2.86 percent from the previous session's close.

(Yonhap News)