Samsung Heavy Industries Co., Ltd. (KRX:010140) has told the market it intends to win $13.9bn of orders in 2026. Of that, $5.7bn is commercial vessels — LNG carriers, container ships, tankers. The other $8.2bn is offshore facilities.
Fifty-nine percent of the target comes from the part of the business that is not shipbuilding.
For context, the company won $7.9bn of orders in all of 2025. This year's target is 76% higher, and the increase comes almost entirely from offshore. New orders through July reached about $10bn, so the plan is working so far, and the backlog stood at $35.9bn at the end of June.
The centrepiece is a contract signed with Delfin Midstream for the first unit of its floating LNG project, at $2.88bn.
A floating LNG vessel — an FLNG — is a gas liquefaction plant built onto a ship hull and moored over or near an offshore gas field. It chills natural gas to around minus 162 degrees Celsius and offloads liquid LNG directly to carriers, which removes the need for a subsea pipeline to shore and an onshore terminal. Cryogenic process equipment, on a floating structure, in open water. Very few yards on earth can build one, and Samsung Heavy has built more of them than anyone.
Delfin's project is off the Louisiana coast, using existing pipeline infrastructure — a way to export American gas without permitting a new onshore terminal. It has been in development for years.
Now do the arithmetic. If one contract is $2.88bn and the offshore target is $8.2bn, then Samsung Heavy needs roughly two more awards of similar size to hit its number. Management has named the candidates: a second Delfin unit and the Ksi Lisims project in Canada, both hoped for in the second half.
That is an order target resting on two decisions by two customers.
This is the part that deserves stating plainly, because the recovery narrative tends to skip it.
Samsung Heavy Industries reported net losses in every fiscal year from 2015 through 2023. Nine consecutive years. The cumulative total across that stretch exceeds ₩7tn. Operating income was negative from FY2015 through FY2022 — eight straight years.
The cause was offshore. Korean yards took enormous contracts for offshore production units and drilling rigs in the early 2010s, priced them optimistically, discovered that the engineering scope was larger than assumed, and then watched customers cancel or defer when the oil price collapsed. The losses were recognised as expected contract losses, all at once, repeatedly.
The damage is still visible. Retained earnings at 30 June 2026 were negative ₩1,276,928,668,233. The company has been profitable for two years and remains ₩1.28tn in the hole on accumulated earnings. Share capital was cut from ₩3,150.6bn to ₩880.1bn in a capital reduction that absorbed losses. Total liabilities of ₩13,249.0bn sit against ₩4,710.4bn of equity — a ratio of 2.81, the highest of Korea's three large yards.
So the company is going back, at scale, into the business that broke it.
Four things, and they matter.
The first is the product. FLNG is not a drillship. A drillship is a speculative asset ordered by a contractor betting on day rates; when rates fell, buyers walked away and yards were left holding hulls. An FLNG is ordered by a gas developer against a specific field with a specific offtake plan. Cancellation is far harder and far less likely.
The second is pricing. The contracts being signed now were negotiated in a market where only a handful of yards can bid, after a decade in which nobody added offshore capacity. That is the opposite of 2012.
The third is the evidence in the accounts. Operating margin has climbed steadily: 2.9% in FY2023, 5.1% in FY2024, 8.1% in FY2025, 10.1% in the second quarter of 2026. A yard recognising contract losses does not produce that pattern. Whatever is in the current backlog is being delivered at or above the price assumed.
The fourth is cash. Operating cash flow across the first half of 2026 was ₩2,306.9bn on the cumulative basis Korean interim statements use — 37.6% of first-half revenue. Total liabilities rose ₩2,395.2bn over the same period, almost all in current liabilities, which for a yard means customer advances arriving on newly signed work. Samsung Heavy is being paid in front of the work, which is the structural protection offshore contracts lacked last time.
There is also a small human marker worth noting: the company paid a performance bonus this year for the first time in twelve years. That is a reasonable proxy for how long the drought lasted.
The risk is not that FLNG is a bad business. It is that Samsung Heavy has chosen a business with almost no diversification inside it.
A commercial shipbuilder winning $5.7bn of orders does so across perhaps forty vessels and a dozen customers. If two owners defer, the target still gets met. An offshore builder chasing $8.2bn does it across two or three awards. If the second Delfin unit slips six months — and gas projects slip routinely, on financing, permitting or offtake — the year's order intake misses badly, and the miss is entirely outside the company's control.
The same concentration runs through delivery. An FLNG takes years and represents a large fraction of yard capacity. One problem project can absorb the margin from everything else, which is precisely the mechanism that produced nine years of losses.
And the second quarter, for all its improvement, missed analyst estimates. Operating profit of ₩325bn was up 58.7% and still short of what the market expected.
The second Delfin unit. If it is awarded in the second half, the offshore target is essentially secured and the FLNG franchise is confirmed as repeat business rather than a single win. If it slips into 2027, the $13.9bn target is missed and the question becomes whether the first unit was a one-off.
Second, Ksi Lisims. A Canadian award would prove Samsung Heavy can win FLNG work outside a single developer relationship.
Third, and most important for anyone holding the stock: the gross margin on offshore work as those contracts move into the revenue-recognition phase. Gross margin was 14.6% in the second quarter. The offshore units signed this year will not meaningfully affect revenue until 2027 and 2028. The number to watch is whether it holds when they do — because the last time this company built offshore at scale, the margin looked fine right up until it didn't.
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