Samsung Heavy Industries, one of South Korea’s shipbuilding giants, is navigating a pivotal year as it pursues ambitious growth targets despite a mixed first quarter in 2026. The company’s latest financial results, released on May 3, 2026, offer a snapshot of both the challenges and opportunities ahead, as reported by multiple sources including Hankyung and GetNews.
Hana Securities, reflecting renewed confidence in the company’s trajectory, raised its target price for Samsung Heavy Industries (SHI) to 40,000 KRW—a notable 11.1% increase from previous estimates. The revised outlook is based on a projected price-to-book ratio (PBR) of 3.8 times the expected book value per share in 2027, and a forward-looking price-to-earnings ratio (PER) of 29.5 for 2026. This optimism comes despite the company’s first-quarter results falling short of market consensus, highlighting the nuanced landscape SHI faces as it moves forward.
For the first quarter of 2026, SHI reported consolidated revenue of 2.9023 trillion KRW, marking a 16.4% increase year-over-year and a 2.3% rise from the previous quarter. Operating profit stood at 273.1 billion KRW, up a staggering 121.9% compared to the same period last year, but down 7.8% from the previous quarter. The operating margin came in at 9.4%, a slight dip from the previous quarter but still indicative of a long-term improvement trend, according to Hana Securities’ senior researcher Yu Jae-sun.
Yet, these headline figures mask some underlying complexities. SHI’s operating profit and revenue both missed market expectations, with revenue coming in about 2.9% below consensus and operating profit lagging by nearly 19.7%. A key reason, as noted by Hankyung, is a structural shift in accounting for performance bonuses. Previously, SHI recognized annual bonuses in the fourth quarter, but starting in 2026, the company began allocating these costs quarterly. This change front-loaded bonus expenses into the first quarter, negatively impacting operating profit and pushing some positive effects into later quarters.
Another factor dampening results was SHI’s high foreign exchange hedge ratio. While competitors benefited from rising exchange rates, SHI’s policy of fully hedging its dollar receipts through forward contracts meant first-quarter sales were recognized at older, lower exchange rates (around 1,200 KRW/USD). This structural characteristic limited the company’s ability to capitalize on recent currency fluctuations, a point highlighted by Hankyung’s analysis.
Non-operating results also took a hit, with a roughly 150 billion KRW loss on forward contracts tied to Russian projects. This foreign exchange loss contributed to net income attributable to controlling shareholders coming in at 101.6 billion KRW—a modest year-over-year increase, but well below market expectations.
The company’s sales mix remained largely consistent, with commercial ships accounting for 75% and offshore projects 25% of revenue, mirroring previous quarters. LNG carriers continued to make up half of the ship types in sales, underscoring SHI’s strong position in this high-demand segment.
On the order front, SHI secured 3.1 billion USD in new orders during the first quarter, achieving 22.3% of its ambitious annual target of 13.9 billion USD. This included contracts for 18 commercial ships—comprising six LNG carriers and four tankers—as well as 400 million USD in offshore plant orders. The order backlog at the end of March 2026 stood at 29.4 trillion KRW (or 29.9 billion USD, as reported by GetNews), providing about 2.3 years’ worth of work at current revenue rates.
What’s particularly driving optimism for SHI is the accelerating visibility of floating liquefied natural gas (FLNG) orders. Preliminary contract periods and amounts for the Coral FLNG project expanded during the first quarter, and main contracts for both Coral FLNG and Delfin FLNG are expected in the first half of 2026. The second unit of Delfin FLNG and the Western Canada FLNG project are anticipated to materialize in the second half of the year. Ongoing front-end engineering and design (FEED) bids for FLNG projects in Argentina, Mexico, and Suriname are also in the pipeline, aimed at securing mid- to long-term growth.
SHI’s long-term growth strategy is increasingly centered on FLNG and the defense sector. The company is recognized as a global leader in FLNG construction, with a portfolio expected to reach six units by the end of 2026, including Z-FLNG, Cedar FLNG, Coral Sul FLNG, Delfin’s first and second units, and Western FLNG. According to DS Investment Securities, FLNG sales could exceed 4 trillion KRW from 2027, with profitability boosted by change orders and efficiencies from repeat builds. NH Investment & Securities projects sustained FLNG demand through 2030, particularly as Eni’s Coral follow-up projects and Argentina’s large-scale FLNG developments expand the order pipeline.
In defense, SHI’s participation in the U.S. next-generation logistics support ship (NGLS) concept design is seen as a strategic move to address its historical weakness in special-purpose vessels. Yuanta Securities points out that establishing a clear direction for Korea-U.S. shipbuilding cooperation could be a “key trigger” for further share price gains.
Looking ahead, the second quarter of 2026 is widely viewed as a potential inflection point. Meritz Securities predicts that revenue could grow by 15.9% quarter-over-quarter, with the operating margin climbing to 14.6%. Daol Investment & Securities expects profitability to rise stepwise from the second quarter, driven by the reactivation of SHI’s second dock, increased global operations sales, and expanded construction of vessels ordered in 2024 and beyond.
Annual forecasts from Yuanta Securities suggest SHI could achieve 12.919 trillion KRW in revenue and 1.841 trillion KRW in operating profit for 2026, with a PER of 16.7, PBR of 4.5, and a return on equity (ROE) of 31.7%. By 2027, these valuation metrics are expected to improve further as the company’s growth story matures.
Still, risks remain. The company and analysts alike acknowledge several factors that could derail progress: a global economic slowdown or sharp drop in energy prices could delay new offshore plant orders; rising raw material (especially steel) prices could squeeze margins; and delays in order intake or ship construction could stress cash flow. The high foreign exchange hedge ratio, while providing stability, may continue to limit SHI’s upside compared to competitors during periods of currency volatility. Additionally, the outcome of major FLNG contract signings and the tangible impact of the second dock’s reactivation on production capacity will be crucial variables determining the company’s valuation trajectory.
Despite these uncertainties, SHI remains confident in its ability to meet its annual revenue guidance of 12.8 trillion KRW and to reinforce its stable earnings base with an order backlog covering more than three years of expected sales. As the company eyes a future shaped by FLNG expansion and defense diversification, all eyes are on the coming quarters to see if these ambitions translate into lasting results.