Samsung Heavy Industries (010140.KS): 3Q26 earnings to be in-line; maintain Neutral

We expect Samsung Heavy's 3Q26 operating profit to come in at W356B (10.9% OPM), largely in-line with Street estimates, on sales of W3.2T, up 24% y-y, driven by production ramp of offshore projects and continued sales contribution from global operations and dock #2. With labor union negotiations finalized, the company expects limited impact on 3Q26 earnings given pre-emptive cost provisions, while FX movement does not have an impact on the OPM trend. New orders stood at c.$12B as of 3Q-end, tracking 86% of 2026 guidance, securing 4 LNG, 8 tanker and 2 containership orders in 3Q26. However, we would need more clarity on the order outlook (especially LNGC), sales/earnings upside or quantifiable market measures before turning more positive. We lower our target P/Orderbook multiple to 0.41x (from 0.48x) and revise down our Dec-27 PT to W21,000 (from W25,000), maintaining Neutral.