Samsung Heavy Industries Stock Outlook: A Trump Beneficiary?

The stock market has been quite volatile lately, and those interested in the shipbuilding industry are likely paying close attention to Samsung Heavy Industries. Today, we'll discuss Samsung Heavy Industries' recent trends and future stock price outlook.

Samsung Heavy Industries Company Analysis

Samsung Heavy Industries is one of South Korea's leading shipbuilding and offshore plant companies, possessing world-class shipbuilding and offshore facility manufacturing capabilities. While it faced difficulties due to the prolonged shipbuilding slump in recent years, it is strengthening its competitiveness through proactive restructuring and technological development.

Its strengths include high technology and quality. Samsung Heavy Industries has accumulated world-class shipbuilding technology and know-how based on its long history and tradition. It also holds a leading position in the field of eco-friendly vessels and high-value-added offshore plants using the latest technology.

Its diverse customer base enables stable profit generation. It maintains long-term business relationships with major shipping companies both domestically and internationally, and has secured high recognition and credibility in overseas markets.

The rising expectation for a recovery in the shipbuilding industry is also a positive factor. The strengthening of environmental regulations by the International Maritime Organization (IMO) is increasing the demand for eco-friendly vessels, and rising oil prices are also contributing to a recovery in the offshore plant market.

However, a weakness is its fragile financial structure, leading to difficulties in securing funds. Past poor order intake and business deterioration resulted in significant losses, increasing its debt ratio. Its operating profit margin is also low, requiring improvement in profitability.

Intense competition with rival companies is another challenge. Domestically, it competes with Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, etc., and internationally, it competes with companies from China, Japan, etc.

The future outlook for Samsung Heavy Industries is positive, but uncertainty remains. The recovery of the shipbuilding industry and improvement of its financial structure are crucial variables. Strategic responses are needed depending on the circumstances, and proactive interest and support from shareholders are necessary.

Samsung Heavy Industries Related Stocks

Stocks related to Samsung Heavy Industries are as follows:

1. Korea Shipbuilding & Offshore Engineering: As the intermediate holding company of the Hyundai Heavy Industries Group, it is one of the leading companies in the domestic shipbuilding industry along with Samsung Heavy Industries. Like Samsung Heavy Industries, it engages in shipbuilding and offshore plant businesses, and the two companies are in competition with each other.

2. Daewoo Shipbuilding & Marine Engineering: One of Korea's major shipbuilders, it has strengths in LNG carriers and offshore plants.

3. Hyundai Mipo Dockyard: A shipyard specializing in the construction of medium-sized vessels, mainly building oil product carriers and container ships.

4. Hanjin Heavy Industries & Construction: Its main businesses are special ships (defense industry) and shipbuilding, and it operates a large shipyard in Subic, Philippines.

5. STX Heavy Industries: It engages in the ship engine and plant business, and also conducts ship management business through its subsidiary, STX Marine Service.

While these stocks are not directly related to Samsung Heavy Industries, they are companies involved in the shipbuilding and offshore plant industry and may be affected by fluctuations in Samsung Heavy Industries' stock price. Before investing, it is essential to thoroughly analyze the company's financial condition and performance and seek professional advice.

Samsung Heavy Industries Stock Price Outlook

As of the second quarter of 2023, Samsung Heavy Industries' stock price was ₩5,010, down approximately 30% year-on-year. This is partly due to the worsening shipbuilding industry conditions caused by factors such as the global economic downturn, decreased maritime freight volume, and the war in Ukraine.

However, recently, the expectation of a recovery in the offshore plant market has increased with the rise in international oil prices. Samsung Heavy Industries possesses high technology and competitiveness in the offshore plant sector, leading to an anticipated increase in orders in this area.

Furthermore, as of late July 2023, it is making good progress, having achieved 65% of its order target for the year. By filling its order backlog mainly with high-value-added vessels such as liquefied natural gas (LNG) carriers, it is raising expectations for improved profitability.

However, because uncertainty still exists in the shipbuilding industry, the outlook for Samsung Heavy Industries' stock price is difficult to predict. Other external factors include the lifting of China's COVID-19 lockdowns and the US interest rate hikes.

Investors should always monitor the company's financial status, performance, and industry trends and make investment decisions carefully, referring to professional advice.

Samsung Heavy Industries Target Stock Price

Domestic securities firms are setting the target price for Samsung Heavy Industries at an average of ₩6,800. Some securities firms are raising their target prices in anticipation of improved performance for Samsung Heavy Industries along with industry recovery.

However, as mentioned earlier, due to the significant uncertainty in the shipbuilding industry and risks such as rising raw material prices, it is important to keep in mind that there may be a discrepancy between the actual stock price and the target price.

Investors should not make investment decisions based solely on the target price but should carefully consider the company's fundamentals and industry trends comprehensively.

Samsung Heavy Industries Dividends

Samsung Heavy Industries plans not to pay dividends until the 2023 fiscal year. This is because the company's financial condition is unstable, and efforts are underway for business normalization.

If the company's business performance improves and its financial condition stabilizes, there is a possibility of resuming dividend payments in the future. However, dividend policy may change depending on changes in the company's business environment, so investors need to continuously check the company's financial information and announcements.

Personal Thoughts

Samsung Heavy Industries is one of the world's most competitive companies in the shipbuilding industry. Recently, it has been working to strengthen its competitiveness in the eco-friendly ship market, and it also holds a high market share in the high value-added ship sector, such as LNG carriers.

However, the shipbuilding industry is a cyclical industry, and its performance can fluctuate significantly depending on global economic conditions and shipping market conditions. While the shipbuilding industry is currently recovering after the COVID-19 pandemic, uncertainty still exists due to factors such as rising raw material prices and labor shortages.

The stock price outlook is difficult to predict. Before investing, it is necessary to fully analyze the company's financial status, management strategy, and industry trends and make a careful decision considering your investment objectives and risk tolerance.

Today, we looked at the stock price outlook for Samsung Heavy Industries. Remember that stock investment always requires careful decision-making, and I wish you all successful investments!