[Click e Stocks] "Samsung C&T, Momentum Lacking Phase... Target Price Down"

[Asia Economy Reporter Song Hwajeong] Meritz Securities on the 28th downgraded the target price of Samsung C&T from the previous 185,000 KRW to 170,000 KRW, viewing it as a period where it is difficult to find momentum for a stock price rebound. The investment opinion was maintained as 'Buy.'

Researcher Eun Kyungwan of Meritz Securities stated, "The target price was lowered reflecting the poor performance in the third quarter this year and the decline in the value of listed shares," adding, "Except for the high discount rate (about 64%) compared to the net asset value (NAV), it is a period where it is difficult to find clear momentum."

Samsung C&T's third-quarter performance fell short of market expectations (consensus). Samsung C&T's third-quarter sales increased by 19.3% year-on-year to 8.3 trillion KRW, meeting consensus, but operating profit recorded 141 billion KRW, down 4.1% due to one-time costs in the construction sector, significantly missing market expectations. Researcher Eun explained, "Operating profit fell significantly short of market expectations due to temporary cost increases during the domestic coal power project (Gangneung Anin Thermal Power Plant)," adding, "Other business divisions, excluding the construction sector which caused the company-wide performance shock, continued stable performance."

The stock price has remained sluggish, peaking at the point when owner judicial risks were resolved. Researcher Eun analyzed, "The stock price is burdened by the absence of visible results in efforts to secure future growth engines such as bio, eco-friendly, and digital sectors emphasized recently by the company, the decline in the value of listed shares including Samsung Electronics, and the owner's family decision to sell Samsung affiliate stocks to raise inheritance tax funds."

For stock price revaluation, performance recovery and changes in capital policies such as utilizing treasury stocks are necessary. Researcher Eun said, "For a full-fledged stock price revaluation, it seems important to recover performance, implement active capital utilization policies using treasury stocks (12.5%) held, and secure meaningful results from new business investments."