"After FLNG Comes FDC"... Samsung Heavy Industries Expands Growth Engines [Click e-Stock]

Expectations Rise for Floating Data Center Orders
Concerns Over Absence in Defense Business Expected to Ease

Yonhap News

Samsung Heavy Industries, which has maintained a solid order record centered around floating liquefied natural gas production facilities (FLNG), is now expanding into floating data centers (FDC). Concerns about its relatively lower profitability compared to competitors and the absence of a defense business, which have been considered weaknesses, are also expected to be gradually resolved.

On July 16, Samsung Securities maintained its 'Buy' investment opinion on Samsung Heavy Industries, citing this background. Although it lowered the target price from 43,000 won to 40,000 won, it still sees over 83% upside potential compared to the previous day's closing price of 21,850 won.

This year, Samsung Heavy Industries has already secured new orders worth 10 billion dollars (approximately 14.917 trillion won). This figure is 26% higher than the total annual orders recorded last year and accounts for 72% of the company's full-year order target for the current year.

Particularly positive is that 45% of this year’s orders have come from FLNG, the company’s main product. Samsung Heavy Industries maintains an exclusive position in the ultra-large FLNG market. According to Clarkson, a UK-based shipbuilding and shipping market analysis firm, Samsung Heavy Industries has the highest FLNG market share at 44% based on total order backlog and vessel count. It is understood that for all large-scale FLNG projects with more than 3 million TPA capacity, Samsung Heavy Industries won every order.

Floating data centers (FDC) were highlighted as the next growth engine. The core of offshore structures lies in the technology to move onshore plants into limited marine spaces, and Samsung Heavy Industries has proven its competitiveness in floating offshore structures such as FLNG.

Samsung Heavy Industries was the first among major shipyards to announce a timeline for launching commercial FDC services. The group-wide partnership with OpenAI for data center infrastructure also adds to the growth expectations for FDC.

Concerns over the company’s absence in the defense business, and the resulting worries about entering the US market, are expected to ease. This is because Samsung Heavy Industries is emerging as a possible participant in the next-generation US military support ship and medium-sized replenishment oiler projects.

Profitability is also forecast to improve. Samsung Securities projects Samsung Heavy Industries’ second-quarter sales at 3.287 trillion won and operating profit at 353 billion won—a 22.5% and 72.2% increase, respectively, from the same period last year. However, operating profit is expected to fall 10.3% below the market consensus.

Yangsoo Han, a researcher at Samsung Securities, commented, "Third-quarter results may still lag behind competitors, but ultimately, revenue recognition from high-value orders and volumes hedged at favorable exchange rates will raise profitability. In the end, the company’s final profitability level will align with that of its competitors."

This content was produced with the assistance of AI translation services.