Quick Note - Korea Industrials - Implication of Canada Patrol Submarine Project (CPSP)

Research evidence excerpt

Quick Note - Korea Industrials - Implication of Canada Patrol Submarine Project (CPSP)

Global Markets Research

Korea Industrials 22 June 2026

EQUITY: CAPITAL GOODS

Implication of Canada Patrol Submarine Project (CPSP) Research Analysts

Korea Industrials

Eon Hwang - NFIKQuick Note eon.hwang@nomura.com

+822 3783 2318

A 50:50 race, Korean consortium partners have stronger hardware and delivery case than

German counterpart; valuation upside appears largely reflected for Hanwha Ocean.

~USD24bn CPSP to be announced this month

Canada’s Patrol Submarine Project (CPSP) is likely approaching a critical stage, with the

market expecting a contract winner to be announced soon. The project aims to procure 12

conventional submarines, with total lifetime value estimate ofc.KRW60tn including MRO,

logistics, spare parts and lifecycle support, in our view. Excluding MRO, we estimate the

project’s vessel procurement portion to be a USD24bn opportunity for the South Korean

consortium partners if they win orders for the full 12-unit package.

We believe the competition has narrowed to a one-on-one race between the Korean

consortium partners Hanwha Ocean (042660 KS, Reduce) and HD Hyundai Heavy

Industries (329180 KS, Reduce), and Germany’s TKMS (TKMS GR, Not rated). If the

Hanwha Ocean-HD Hyundai Heavy Industries consortium wins the contract, we expect

Hanwha Ocean and HD Hyundai Heavy Industries to take 8 and 4 units, respectively. We

assess the winning probability at 50:50. If Canada’s decision is based mainly on hardware

capability, delivery reliability and cost, Korea appears better positioned. If the decision is

based mainly on NATO integration, Atlantic security alignment along with NATO allies, the

Germany counterpart remains highly competitive.