Investors should weight more on Samsung Heavy Industries' expansion of offshore business than its earnings results, Daewoo Securities suggested.
Analyst Sung Ki-Jong said on April 17, "On IFRS consolidated basis, Samsung's estimated turnover for the Q1 2012 is KRW 3.41trn ($3bn), down by 3.0% year-on-year, while operating profit and pre-tax profit are KRW 188.6bn and KRW 253.2bn, down by 52.5% and 36.2%, respectively."
Added, "It is estimated that operating margin for Q1 would stand at 5.5%, down by 5.7%p on the same period 2011 and down by 0.4%p on previous quarter."
Increased proportion of low-margin newbuildings ordered from 2009-2010 and rather low input of raw materials in cheaper value have caused Q1 profits going down.
Daewoo's Sung said, "Samsung is likely to win massive orders as it did in 2011."
He forecast, "A result of Nigerian Egina FPSO project to be announced during the second quarter, Samsung is looking forward to winning the project, valued at about $2bn."
"Competing with Hyundai Heavy Industries, which has previous construction experience for large FPSOs, will be tough, however, considering Samsung's performance and brand awareness in offshore market, it also has a chance."
Meanwhile, Sung added, "Along with expansion of development and investment for onshore/offshore oil and gas, amid high oil prices, offshore-related ship financing is highly likely to increase. For these reasons, Samsung's biddings for huge offshore projects have grown as ever, in numerical and value terms."