Samsung Heavy Industries(SHI) is expected to make a turnaround in the surplus starting from next year thanks to a series of orders. Its stock price has been on a steady upward trend, rising 14 percent this year, as foreign investors focused on buying amid heightened chances of improved earnings. Foreign investors account for nearly 20 percent stake in SHI.
In addition, expectations for better performance have risen due to positive factors such as increased demand for liquefied natural gas (LNG) due to tightened regulations of the International Maritime Organization (IMO) and higher oil prices.
Starting with orders for two LNG carriers worth 419.9 billion won in January this year, SHI has received orders worth 2.3 billion dollars (approximately 2.6 trillion won) for seven LNG carriers and one floating production storage and offloading (FPSO).
It has won the largest number of LNG carriers among South Korean shipbuilders, or seven in total. This is about 30 percent of this year's order target of $7.8 billion.
"We confirmed that the recent increase in oil prices could lead to orders for offshore production facilities," said a representative for the business community.
In addition, the growing demand for LNG ships is also a positive factor for the company. The move was helped by the IMO's tougher regulations on standards for containing sulfur oxides on ship fuel.
SHI's annual sales are expected to rise 28.6 percent to 6.7 trillion won this year from 5.2 trillion won last year, according to FnGuide.
Its annual sales forecast will increase to 7.63 trillion won in 2020, when its order performance will be reflected in its performance in earnest, and its operating profit is expected to shift to 147.7 billion won. Net profit is also expected to turn to surplus at 91.4 billion won.