[Click eStock] "Samsung C&T to Continue Strong Momentum in Q2 into Second Half"

Fashion Sector Shines with Business Restructuring and Cost Efficiency
IBK Investment & Securities "Samsung C&T Target Price Raised from 180,000 KRW to 200,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Samsung C&T posted strong earnings in the second quarter of this year, driven by all divisions except construction. The construction sector, which had been sluggish, is also expected to improve its performance in the second half of the year with new projects.

According to IBK Investment & Securities on the 5th, Samsung C&T's sales in the second quarter increased by 18.3% year-on-year to KRW 8.5476 trillion, and operating profit rose by 78.5% during the same period to KRW 425.2 billion. Both sales and operating profit increased by 9% and 40.3%, respectively, compared to the previous quarter.

The strong performance of all divisions except construction appears to have positively impacted the second-quarter results. In particular, the fashion division's sales reached KRW 444 billion, increasing only 5.5% from the previous quarter, but profitability improved, resulting in operating profit of KRW 43 billion, a 104.8% increase during the same period. Kim Jang-won, a researcher at IBK Investment & Securities, explained, "The recovery in consumer sentiment led to increased product demand, and the restructuring of the business and cost efficiency shone through."

(Provided by IBK Investment & Securities)

The construction division was sluggish. Construction sales in the second quarter were KRW 2.659 trillion, down 6.4% year-on-year. Operating profit also decreased by 23.6% during the same period to KRW 113 billion. Researcher Kim said, "The construction division showed somewhat disappointing results due to the completion of large projects." Construction orders in the second quarter amounted to KRW 1.111 trillion, falling short of the KRW 6.403 trillion recorded in the first quarter.

However, from the second half of the year, the construction division is expected to improve, and other divisions are also anticipated to continue their growth. Construction orders are expected to reach the annual target of KRW 10.7 trillion with the start of new projects, including high-tech. IBK Investment & Securities also forecasted that the trading division will maintain a good trend in the second half, supported by rising raw material prices and increased cargo volume. Although product demand in the fashion division varies by season, it is expected to sustain growth due to structurally improved profitability and a product lineup optimized for demand.

Accordingly, IBK Investment & Securities maintained a "Buy" rating on Samsung C&T. The target price was raised from KRW 180,000 to KRW 200,000. The closing price on the previous day was KRW 144,500.