Shares of Samsung Heavy Industries slumped as much as 27 per cent to their lowest point in a year on Wednesday after the South Korean shipbuilder said it expected a continued loss next year and announced a $1.4 billion rights offer plan.
Samsung Heavy said in a regulatory filing it expected an operating loss of 240 billion won ($220 million) next year, from a loss of 490 billion this year. The shipbuilder also said it planned to issue new shares worth of 1.5 trillion won to existing shareholders by May 2018 to improve its finances. “Samsung Heavy's trouble could pose a risk to other affiliates of Samsung Group, but this does not represent a risk to the entire shipbuilding industry,” said Park Moo-hyun, an analyst at Han Investment & Securities.
Samsung Heavy lagged crosstown rivals like Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries in terms of the ability to build large vessels, he added. “The rights issue will not solve its liquidity problems. The outlook is not good for Samsung Heavy,” he said.
Other shipbuilders also lost ground, with Hyundai Heavy down 5.2 per cent and Daewoo Shipbuilding falling 3.3 per cent. Samsung Heavy affiliate Samsung Engineering fell 4.6 per cent.
($1 = 1,089.8000 won)