三星重工 (010140.KS): Samsung Heavy Ind.: Strong earnings, Softening forward indicators — Downgrade to Neutral

We downgrade SHI to Neutral from Buy and cut our PT by 32% to Won20,500. While we expect 2027-29E earnings growth to remain the strongest in the sector, forward indicators are becoming less supportive. A maturing order cycle, softer pricing and intensifying competition are likely to weigh on future backlog quality. Unlike HHI, SHI lacks exposure to AI power engines and meaningful naval opportunities, leaving floating data centers (FDC) as its primary strategic growth option. Full FX hedging, improving shipbuilding margins and E&I contribution from Samsung Electronics' memory fab construction should nevertheless support earnings growth through 2028E. We forecast 3Q26 OP of Won340bn (10.8% OPM), 2% below recently raised consensus, reflecting weather-related disruptions, and cut 2026-30E EPS by 4-22% to reflect weaker ship prices. Our PT is based on 2.9x 2027E P/BV and 18.5% ROE, implying 11x 2029E P/E; we view risk-reward as increasingly balanced.