[Click e-Stock] "Samsung Heavy Industries Expected to Improve Performance Through 2028... Target Price Raised"

Target Price Raised by 25% Compared to Previous Estimate

On October 24, NH Investment & Securities announced that it expects Samsung Heavy Industries' performance improvement to continue through 2028, and accordingly raised its target price from 24,000 won to 30,000 won. The firm maintained its 'Buy' investment rating.

Jung Yeonseung, an analyst at NH Investment & Securities, stated, "We raised our target price by 25% compared to the previous estimate, reflecting a 9-13% increase in our operating profit forecasts for 2026 to 2028." He explained, "New orders are expected to remain solid in 2026, and the performance improvement is projected to be prolonged through 2028."

In the third quarter, Samsung Heavy Industries posted revenue of 2.63 trillion won, up 13.4% year-on-year, and operating profit of 238.1 billion won, up 98.6% (operating margin of 9.0%), surpassing consensus estimates. Analyst Jung noted, "Although the company paid 40 billion won in performance bonuses following the conclusion of wage and collective bargaining agreements, it also achieved more than 40 billion won in cost savings through contingency reductions from repetitive construction." He added, "Thanks to productivity improvements and cost stabilization, the company is recording slightly higher profitability than expected across both commercial shipbuilding and offshore plant sectors."

Fourth-quarter results are expected to be even stronger. Jung forecasted, "Although the number of business days in the fourth quarter will be similar to the third quarter, revenue from high-margin offshore plants will increase, and the prices of ships under construction will rise slightly, bringing the operating margin close to 10%." He continued, "These results confirm that the profitability of previously secured ship orders across domestic shipbuilders may be higher than expected. This is not only due to a simple decline in steel plate prices, but also the result of productivity improvements and cost reduction efforts by shipbuilders. As a result, Samsung Heavy Industries' operating margin could improve to as much as 13% in the mid- to long-term."

NH Investment & Securities projects Samsung Heavy Industries' new orders for next year at 8.5 billion dollars. Analyst Jung commented, "Specifically, we expect 5 billion dollars in the commercial ship segment, including 12 LNG carriers, and 3.5 billion dollars in the offshore segment." He added, "Solid order intake is likely to continue in 2026, and as a result, the performance improvement cycle is expected to be prolonged through 2028."