Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

Samsung Heavy Industries / Equity Bottom-Up

<ul>
<li>Backlog nudged up to ~US$33.4B (~3.2× revenues) with August LNGC wins and offshore pre-work added since May; further upside hinges on large offshore FIDs.</li>
<li>Q1 FY2025 showed solid YoY operating growth (+58%) but a seasonal QoQ dip; EPS conversion remains diluted by financing and FX costs.</li>
<li>FY25 P/E (~45×) appears elevated, EPS growth and offshore execution are expected to compress multiples into the mid-20s by FY27, aligning with peers.</li>
</ul>


Backlog nudged up to ~US$33.4B (~3.2× revenues) with August LNGC wins and offshore pre-work added since May; further upside hinges on large offshore FIDs.
Q1 FY2025 showed solid YoY operating growth (+58%) but a seasonal QoQ dip; EPS conversion remains diluted by financing and FX costs.
FY25 P/E (~45×) appears elevated, EPS growth and offshore execution are expected to compress multiples into the mid-20s by FY27, aligning with peers.


Samsung Heavy Industries – Premium Sustained, Delivery the Key

External broker reports(aggregated public sources), Daishin Securities

Daishin Securities

External broker reports(aggregated public sources)

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<ul><li>2Q25 OP forecast to beat consensus at W178bn</li><li>Margin gains set to accelerate in 3Q as legacy orders are completed</li><li>FLNG project bid quietly progressing despite concerns</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

2Q25 OP forecast to beat consensus at W178bnMargin gains set to accelerate in 3Q as legacy orders are completedFLNG project bid quietly progressing despite concernsContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Samsung Heavy Industries (010140 KS Jul 8, 2025)

<ul>
<li>SHI has signed an MoU with PetroVietnam Shipyard to build two Suezmax and two LR2 tankers, marking its first move into Vietnam.</li>
<li>With Geoje running at 117% utilization, SHI has outsourced over 12 Suezmax tankers to PaxOcean Zhoushan and holds ~$3–3.5 billion in tanker backlog.</li>
<li>While modest in scale, the Vietnam deal could reshape SHI’s outsourcing model—diversifying away from China and laying the groundwork for a longer-term shift in global production strategy.</li>
</ul>


SHI has signed an MoU with PetroVietnam Shipyard to build two Suezmax and two LR2 tankers, marking its first move into Vietnam.
With Geoje running at 117% utilization, SHI has outsourced over 12 Suezmax tankers to PaxOcean Zhoushan and holds ~$3–3.5 billion in tanker backlog.
While modest in scale, the Vietnam deal could reshape SHI’s outsourcing model—diversifying away from China and laying the groundwork for a longer-term shift in global production strategy.


Samsung’s Vietnam Pivot: Small Deal, Big Signal

<ul>
<li>SHI officially terminated $3.54B worth of Russian contracts on June 18, citing prolonged non-performance by Zvezda.</li>
<li>The company is pursuing arbitration in Singapore, aiming to retain $800M in advances and seek additional damages. Most such cases have favoured shipbuilders.</li>
<li>With no production initiated and a strong $28–30B backlog, the impact on operations and FY25 guidance is expected to be minimal.</li>
</ul>


SHI officially terminated $3.54B worth of Russian contracts on June 18, citing prolonged non-performance by Zvezda.
The company is pursuing arbitration in Singapore, aiming to retain $800M in advances and seek additional damages. Most such cases have favoured shipbuilders.
With no production initiated and a strong $28–30B backlog, the impact on operations and FY25 guidance is expected to be minimal.


Samsung Heavy (010140) Ends $3.5B Zvezda Deal; Arbitration On, Order Book Unaffected

<ul>
<li>SHI reported robust Q1 2025 results with revenue of KRW 2.49T (+6% YoY) and operating profit of KRW 123B (+58% YoY), reflecting improved offshore project execution and margin expansion.</li>
<li>Management reiterated FY2025 guidance of KRW 10.5T revenue and KRW 630B operating profit, with offshore accounting for ~40% of new orders and a USD 9.8B full-year target</li>
<li>With LNG carrier replacement demand, FLNG ramp-up, and leadership in eco-vessels, SHI’s earnings trajectory supports its 22x FY27E P/E, despite execution and competition risks.</li>
</ul>


SHI reported robust Q1 2025 results with revenue of KRW 2.49T (+6% YoY) and operating profit of KRW 123B (+58% YoY), reflecting improved offshore project execution and margin expansion.
Management reiterated FY2025 guidance of KRW 10.5T revenue and KRW 630B operating profit, with offshore accounting for ~40% of new orders and a USD 9.8B full-year target
With LNG carrier replacement demand, FLNG ramp-up, and leadership in eco-vessels, SHI’s earnings trajectory supports its 22x FY27E P/E, despite execution and competition risks.


Samsung Heavy Industries (010140.KQ) – Offshore Momentum, LNG Tailwinds Justify Premium

South Korea

Samsung Heavy Industries Co., Ltd. manufactures crude oil tankers, container vessels, bulk carriers, cruisers, and passenger ferries.  The Company also produces steel and bridge structures, and material handling equipment.  In addition, Samsung Heavy Industries provides civil engineering, architectural, and plant construction services.

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Samsung Heavy Industries (010140 KS)

Samsung Heavy Industries – Premium Sustained, Delivery the Key

Backlog increases to $33.4B with LNGC wins and offshore projects; solid YoY growth in Q1 FY2025 but diluted EPS conversion; elevated P/E expected...

Rahul Jain