[Click eStock] "Samsung Heavy Industries Anticipates Consecutive Orders for FLNG and Offshore Data Centers"

KB Securities Maintains "Buy" Rating Despite Lower Target Price

On September 15, KB Securities lowered its target price for Samsung Heavy Industries from KRW 35,000 to KRW 31,000, an 11.4% decrease, while maintaining its 'Buy' investment opinion. The adjustment reflects changes in earnings estimates and shifts in peer group valuations. Although the target price was reduced, KB Securities analyzed that, due to the recent decline in the share price, there is still a growth potential of 44.9% based on the previous day's closing price.

Perspective view of the Floating Data Center (FDC) being developed by Samsung Heavy Industries. Samsung Heavy Industries

The key themes of this report are 'Floating Liquefied Natural Gas Production Facility (FLNG)', a large-scale liquefied natural gas production facility floating in the sea, and the 'Floating Data Center (FDC)', a data center built on water.

KB Securities researcher Jung Dongik explained that Samsung Heavy Industries "finalized contracts for the Coral and Delfin-1 FLNG projects in early June" and is continuing efforts to secure orders for the Delfin-2 and Western Ksi Lisims FLNG projects over the remaining period. If the company succeeds in winning both new orders, the total offshore plant orders for this year could reach up to USD 9.4 billion.

The new order flow is solid. As of September 14, commercial vessel orders, which include 18 LNG carriers, 12 tankers, and 4 container ships, amounted to USD 7.15 billion, while offshore plant orders totaled USD 4.4 billion, bringing the year's cumulative orders to USD 11.55 billion. Given that this year's order targets are USD 5.7 billion for commercial vessels and USD 8.2 billion for offshore plants, commercial vessels have already surpassed their annual goal, and offshore plants have reached 53.7% of the target. Researcher Jung analyzed that there is now a high likelihood that the company will also exceed its initial goal of USD 13.9 billion for the year.

The FDC business, where the company operates data centers while floating at sea, is also nearing significant results. Jung noted, "Samsung Heavy Industries is taking the lead over competitors, and the first contract could be signed as early as the end of this year." In April, the company obtained Approval in Principle (AIP) for a 50-megawatt (MW) FDC, and it is aiming to deliver two units of the inaugural 50MW project in the second quarter of 2028. These are slated to be supplied to developer Mustherian's 'Zeus Project.' Jung added, "Given that commercial vessel production slots are already being marketed for 2029, the management's strong drive for the FDC business is evident."

Earnings forecasts have been slightly lowered. KB Securities revised its sales forecast for Samsung Heavy Industries in 2026 to KRW 12.622 trillion and its operating profit estimate to KRW 1.33 trillion, down by 1.9% and 10.7%, respectively, compared to previous estimates. The 2027 operating profit forecast was also reduced by 5.2% to KRW 1.898 trillion. Despite this, the operating margin is projected to improve steadily, from 8.1% in 2025, to 10.5% in 2026, and 12.8% in 2027.

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