[Edaily Reporter Shin Ha-yeon ] On the 30th, NH INVESTMENT & SECURITIES assessed that SamsungHeavyIndustries(010140)needs to lower its growth expectations for the merchant ship segment due to intensifying competition with Chinese shipbuilders. However, the firm projected that the company could secure new order opportunities in offshore businesses such as floating liquefied natural gas (FLNG) production facilities and floating data centers. While maintaining a “Buy” investment rating, the firm set a target price of 26,000 won, a 19% reduction from the previous level.

Jeong Yeon-seung, an analyst at NH INVESTMENT & SECURITIES, explained in a report released that day, “While changes in long-term earnings estimates through 2028 will be limited due to the company’s 100% currency hedging policy, even amid shifts in the long-term exchange rate outlook, we have lowered the Target PBR by 14% by reducing the perpetual growth rate to reflect rising interest rates and intensifying medium- to long-term competition in the merchant ship segment.”

The aggressive low-price bidding by Chinese shipbuilders was cited as a major concern. The analysis suggests that SamsungHeavyIndustries is facing intensifying competition from Chinese shipbuilders, which are accumulating technological capabilities based on relatively low-priced domestic orders.

Researcher Jeong assessed that “the likelihood of intensifying medium- to long-term competition with Chinese shipbuilders, which are accumulating technological capabilities based on relatively low-priced domestic orders, is increasing.”

This implies that as Chinese shipbuilders enhance their competitiveness, the environment for domestic shipbuilders to secure commercial vessel orders may become more challenging than before. Consequently, it is assessed that moving beyond simple shipbuilding competition to differentiate through high-value-added offshore projects has become crucial.

SamsungHeavyIndustries’ third-quarter earnings slightly exceeded market expectations. Consolidated revenue reached 3.0152 trillion won, a 19.6% increase year-over-year, while operating profit rose 42.1% to 355.9 billion won. The operating profit margin stood at 10.7%.

Operating profit exceeded the market consensus by about 3%. Improved productivity and an increased share of high-value-added vessel sales supported profitability.

Analyst Jeong stated, “Third-quarter revenue was 3.15 trillion won (+19.6% year-over-year), and operating profit was 338.4 billion won (+42.1% year-over-year, OPM 10.7%), exceeding the market consensus by 3% based on operating profit.”

However, the operating profit figure of 338.4 billion won listed in the report’s earnings explanation differs from the 355.9 billion won presented in the earnings comparison table. The operating profit margin of 10.7% is based on the 338.4 billion won figure.

The third quarter also reflected one-time gains related to the offshore business. Although a one-time gain of approximately 280 billion won arose from the settlement of forward foreign exchange contracts for the Rasia project in Nigeria, the impact on net income was limited due to related forward foreign exchange losses and the recognition of provisions.

New orders in the offshore business are expected to be key to a future stock price rebound. SamsungHeavyIndustries is pursuing an expansion of orders centered on FLNG projects and is also seeking new growth opportunities in the floating data center business.

Analyst Jeong emphasized, “For a future stock price rebound, it is crucial to confirm actual orders in 1) FLNG and 2) floating data centers, where the company holds a competitive advantage over Chinese shipbuilders.”

There remains a possibility of securing additional FLNG orders this year. The company expects to secure an additional FLNG unit in the fourth quarter, and new orders are projected to expand next year, including commercial vessels and offshore projects.

Researcher Jeong emphasized, “If the company secures an additional FLNG unit in the fourth quarter, it is expected to achieve its annual target,” adding, “While commercial vessel and offshore orders in 2027 are expected to decline compared to 2026, delivery slots are largely filled through 2029, so the company is expected to maintain a strategy prioritizing price and profitability over aggressive order acquisition.”