[Click eStock] "Samsung Heavy Industries Expected to Maintain Quarterly Profitability This Year"

On the 24th, SK Securities evaluated that Samsung Heavy Industries has sufficient potential for stock price increase due to a turnaround in its performance. Accordingly, it newly initiated coverage with a 'Buy' rating and a target price of 7,800 KRW.

Han Seung-han, a researcher at SK Securities, stated, "In the first quarter of this year, the company succeeded in turning a profit for the first time in 22 quarters," and added, "It is expected to maintain a quarterly profit trend throughout this year."

Samsung Heavy Industries' 2023 sales are expected to increase by 39.2% year-on-year to 8.2777 trillion KRW, with operating profit turning positive at 133.2 billion KRW and an operating profit margin of 1.6%. Researcher Han explained, "The effect of increased order volume since 2021 leading to a reduction in fixed costs per sales unit and rising ship prices will gradually increase," and added, "Since a provision of about 270 billion KRW was proactively set in the fourth quarter of last year to cover this year's increases in outsourcing and labor costs, the company will turn a profit this year."

Samsung Heavy Industries is the only domestic shipbuilder to raise its order target for this year compared to the previous year (from 8.8 billion USD to 9.5 billion USD). In the second half of the year, orders for Qatar's second LNGC batch (expected about 13 to 15 vessels) and one Coral second FLNG vessel (about 1.7 to 2.0 billion USD) are anticipated.

Researcher Han analyzed, "Considering the 8 vessels from Mozambique, which are not included in the order target, the order target for this year is likely to be comfortably achieved," and added, "Stable LNGC and FLNG orders and selective orders focused on profitability this year are expected to lead to both order and performance gains for the time being."