[Click eStock] "Samsung Heavy Industries Expected to See Order Improvement This Year... Investment Rating and Target Price Raised"

On January 19, KB Securities announced that it expects Samsung Heavy Industries' order intake to improve this year, and accordingly raised its investment rating from 'Neutral' to 'Buy', while also increasing its target price from 25,000 won to 35,000 won.

Jung Dongik, an analyst at KB Securities, stated, "Despite the recent share price increase, the upward revision of the target price provides a potential upside of 16.1% compared to the closing price on the base date, which is why we have upgraded our investment rating." He added, "To better reflect the strong earnings growth anticipated to begin in earnest from 2026, we have changed our valuation method from the price-to-book ratio (PBR) to the price-to-earnings ratio (PER) approach."

Samsung Heavy Industries' fourth-quarter results last year are expected to meet market expectations. Analyst Jung commented, "Fourth-quarter sales are projected to reach 2.9556 trillion won, up 9.5% year-on-year, with operating profit rising 66.7% to 290.5 billion won. Both sales and operating profit are expected to be broadly in line with the consensus (sales of 2.9203 trillion won and operating profit of 305.9 billion won)." He further analyzed, "With costs stabilized and no significant one-off expenses identified, the increase in sales and improvement in the product mix, leading to higher shipbuilding prices, should enable further improvement in profitability compared to the previous quarter."

Although order intake was somewhat sluggish last year, it is expected to improve this year. Last year, new orders included 11 LNG carriers, 20 tankers, 9 container ships, and 2 ethane carriers, totaling 7.1 billion dollars for merchant ships and 800 million dollars for offshore plants, amounting to a total of 7.9 billion dollars. This represents an 8.2% increase from the previous year. Analyst Jung noted, "While the merchant ship segment exceeded its order target, offshore plant orders fell short of the initial plan, resulting in only 81% achievement of the new order target of 9.8 billion dollars set at the beginning of the year." He continued, "A significant increase in orders is expected this year, which should make up for last year's underperformance."

Last year's sluggish order intake was largely due to the deferral of the 1.8 billion dollar Coral FLNG additional contract and the 1.5 to 2 billion dollar Delfin FLNG contract to this year. Analyst Jung explained, "As a result, there is a high possibility that not only these deferred projects but also the Western and Golar projects originally scheduled for this year will all be awarded." He forecasted, "If all four projects are contracted, this year's offshore order value could exceed 8 billion dollars."