[Edaily Reporter Kim Hyung-il ] SANGSANGININVESTMENT&SECURITIES has lowered its target price for SamsungHeavyIndustries(010140)to 31,000 won by reducing the valuation premium it had previously applied based on expectations for the company’s U.S. business. The firm maintained its “Buy (BUY)” rating, as it expects the company’s third-quarter earnings this year to be in line with market consensus.

On the 14th, SEOYON Lee, an analyst at SANGSANGINVESTMENT&SECURITIES, estimated SamsungHeavyIndustries’ third-quarter consolidated revenue at 3.1239 trillion won and operating profit at 340.7 billion won. Revenue is projected to increase by 19% and operating profit by 43% year-over-year. Compared to the previous quarter, revenue is expected to decrease by 3%, while operating profit is expected to increase by 5%. The operating profit margin is forecast at 10.9%.

Revenue is expected to decline quarter-over-quarter as the number of operating days in the third quarter decreased by 6% compared to the previous quarter. However, year-over-year growth is anticipated due to the effects of production commencing at Dock 2 and Global Operations.

Profitability is expected to continue improving. This is because the revenue share from orders secured after 2024 is estimated to rise from 45% in the second quarter to 55% in the third quarter. Consequently, margin growth is expected to continue compared to both the same period last year and the previous quarter, driven by improvements in product mix—including an increase in the average shipbuilding price and higher recognition of progress on Floating Liquefied Natural Gas (FLNG) facilities.

The firm judged that the additional labor cost burden resulting from the September wage and collective bargaining agreement settlement would be limited. This is because the outcome of the negotiations did not deviate significantly from early-year expectations, and performance bonuses had already been provisioned in advance on a quarterly basis throughout the year.

SANGSANGINVESTMENT&SECURITIES largely maintained its earnings estimates but lowered its target price. The firm believes there are few factors warranting a revision to its earnings estimates, given SamsungHeavyIndustries’ 100% foreign exchange hedging policy and labor and steel cost trends that align with early-year projections. However, considering local geopolitical developments and market competition in the U.S., the firm reduced the premium previously applied to reflect expectations for U.S.-bound naval vessels and floating data center (FDC) projects and lowered the multiples used in calculating the target price.

The firm assessed that the potential for medium- to long-term growth through U.S. operations remains valid. SamsungHeavyIndustries is continuing discussions with clients to secure FDC orders within the year. The firm expects that, following its entry into the U.S. NGLS conceptual design project, the company will be able to secure U.S.-bound naval vessel orders over the medium to long term.

The current stock price stands at a price-to-earnings ratio (PER) of 9 times based on projected 2028 earnings; given the company’s solid fundamentals and growth potential, the stock is considered undervalued.