"Samsung Electronics to Reach KRW 560,000, Upcycle to Gain Strength" ... Hanwha Ocean Awaits U.S. LNG Carrier and Submarine Orders [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms as of the morning of September 22.
Samsung Electronics was expected to see its semiconductor upcycle extend as long-term contracts expand and its high-bandwidth memory (HBM) competitiveness improves. Its shareholder returns were also expected to move beyond one-off measures and become more consistent.
Analysts said ISU Petasys would accelerate its growth from the fourth quarter as price increases proceed smoothly and the share of expensive multilayer products rises rapidly. For Hanwha Ocean, securing large orders next year for U.S. LNG carriers, warships and offshore plants was identified as key to improving earnings, as competition with Chinese shipbuilders in the merchant vessel market intensifies.
◆ Samsung Electronics (005930)― Daishin Securities / Analyst Hyungkeun Ryu
- Target price: KRW 560,000 (maintained) ᅵ Previous closing price: KRW 274,000
- Investment opinion: Buy (maintained)
Daishin Securities maintained its target price of KRW 560,000 and its Buy rating on Samsung Electronics, saying that numerous positive changes indicating strong demand are emerging.
Analyst Hyungkeun Ryu explained, "A large number of positive changes reflecting strong demand are emerging, and this is evidence that the upcycle is becoming more durable. Whether supply responses such as aggressive capacity expansion seen in the past will emerge cannot be confirmed until the second quarter of 2027."
Samsung Electronics' long-term contracts use a rolling-base structure, in which the contract period is extended by one year each year, securing five years of demand visibility in total. Ryu assessed, "We estimate that discussions on 2031 volumes are currently being made more concrete. Given that some customers are requesting 10-year contracts, we believe the company has successfully signed extension contracts with some customers."
The report assessed that Samsung Electronics' earnings quality is also improving, with the company expected to secure the No. 1 position in next year's HBM market while achieving both pricing advantages and cost improvements. Regarding shareholder returns, it estimated that the company is actively considering share buybacks and cancellations, given the market's lukewarm response to its August announcement. Assuming that all remaining funds are paid out as a special dividend, the report projected this year's dividend per share at KRW 13,014.
The next-generation shareholder return policy, which will begin in 2027, is expected to be announced in January next year. Ryu added, "While shareholder returns in the memory semiconductor industry used to be one-off measures, investors can now expect greater consistency. The reduction in cycle risk based on long-term contracts can serve as a mechanism to make this a reality."※High-bandwidth memory (HBM)HBM is a high-performance DRAM technology that stacks multiple layers of DRAM, the memory used by computers, and connects them vertically through tiny holes called through-silicon vias (TSVs). It greatly widens the pathways through which data travels compared with conventional DRAM, increasing speed while reducing power consumption. HBM is widely used in AI accelerators such as NVIDIA graphics processing units (GPUs).
◆ Hanwha Ocean (042660)― NH Investment & Securities / Analyst Jeong Yeon-seung
- Target price: KRW 126,000 (maintained) ᅵ Previous closing price: KRW 81,800
- Investment opinion: Buy (maintained)
NH Investment & Securities maintained its target price of KRW 126,000 and its Buy rating on Hanwha Ocean, saying that its medium- to long-term LNG carrier and submarine order pipeline remains viable and that opportunities to win orders in the United States will expand from next year.
Hanwha Ocean's accumulated orders stood at $5.94 billion at the end of last month. After winning orders in September for six large containerships worth approximately $1.1 billion, the company's merchant ship orders for this year were expected to exceed $5.5 billion.
Analyst Jeong Yeon-seung said, "In the fourth quarter, we expect an order worth more than $3 billion for a floating production storage and offloading unit (FPSO) for Namibia's Venus Oil Field, a KRW 680 billion final contract for one Thai warship, and results from additional LNG carrier orders. Next year, LNG carrier orders linked to U.S. LNG projects will begin in earnest, while the company is preparing to enter the market for floating data centers after securing design certification."
However, the report assessed that further gains in merchant vessel prices will be limited as price competition with Chinese shipbuilders intensifies. Jeong explained, "Securing meaningful large-scale orders for warships and offshore plants is the most important factor. Although the pipeline for new large special-purpose vessel orders is limited this year, submarine acquisition projects in Egypt, Greece and Middle Eastern countries remain viable over the medium to long term. Specific opportunities to win orders for U.S. warships and naval support vessels are also expected to expand from next year."※Floating Production Storage and Offloading unit (FPSO)An FPSO is a large offshore facility that extracts and stores crude oil in the middle of the sea before transferring it to oil tankers. Because it can complete the production process at sea without onshore facilities, each unit can cost several trillion won.
◆ ISU Petasys (007660)― MERITZ SECURITIES / Analyst Yang Seungsoo
- Target price: KRW 160,000 (maintained) ᅵ Previous closing price: KRW 110,300
- Investment opinion: Buy (maintained)
MERITZ SECURITIES maintained its target price of KRW 160,000 and its Buy rating on ISU Petasys, saying that third-quarter earnings would exceed initial expectations, supported by solid AI demand and the company's ability to pass higher raw material costs on to selling prices. Its estimate for third-quarter operating profit was KRW 96.5 billion, up 65.2% from a year earlier and 5.5% above its previous estimate.
Analyst Yang Seungsoo analyzed, "As customer-specific customization requirements expand across various product categories, including switches and accelerators, and the required specifications become more demanding, the share of multilayer products is expected to continue rising. Their average selling price (ASP) is more than twice that of existing products. The share of revenue from multilayer products, currently in the low teens, is expected to rise to approximately 70% by the end of next year."
Regarding recently raised concerns about disruptions in raw material procurement, the company was found to have secured three to four months of inventory in advance through cooperation with major customers.
Yang assessed, "Given that major customers are expected to introduce high-density interconnect (HDI) boards in 2028 and that the company is considering expanding a dedicated HDI plant with the goal of beginning mass production by the end of 2028, related concerns are being priced in excessively early at this point."※Multilayer (MultiLam)Unlike the conventional method of manufacturing a substrate as a single piece, multilayer manufacturing involves producing the upper and lower boards separately and then stacking and bonding them in sequence. This reduces the sections where signals can leak, making the products suitable for high-speed communications. However, because the number of processing steps increases two- to threefold, their selling prices are much higher than those of conventional products.※High-Density Interconnect (HDI)An HDI board uses laser-drilled holes thinner than a human hair to connect its layers, allowing far more wiring to be densely packed into the same area. Shorter signal paths improve speed and power efficiency, so HDI boards are primarily adopted for AI accelerator substrates. ISU Petasys is still at the technology verification stage, and related concerns have been reflected in its share price.
[email protected] Seong Min-seo Reporter