[Click eStock] "Samsung Engineering, Continued Sales Growth... Stock Undervalued"

Hyundai Motor Securities Report

Hyundai Motor Securities maintained a buy rating and a target price of 40,000 KRW for Samsung Engineering on the 23rd.

This year, the expected consolidated sales are projected to be 10.782 trillion KRW, and operating profit is expected to grow by 7.2% and 4.5% respectively compared to the previous year. Sales in the petrochemical sector are expected to reach 5.1182 trillion KRW, and non-petrochemical sector sales are expected to increase by 6.2% and 8.2% respectively compared to the same period last year.

The order results for projects expected to be announced within the first quarter have been somewhat delayed, but this appears to be a matter of timing. Order results for the Jordan refinery plant, Algeria PDH/PP, and two Saudi Amiral PKGs are expected to be announced within the first half of the year. The order status for the second phase of the Saudi Jaufurah gas field project currently underway is also expected to be confirmed in the second quarter.

Donghyun Shin, a researcher at Hyundai Motor Securities, explained, “While sales growth continues across both petrochemical and non-petrochemical sectors, the cost ratio is expected to slightly improve due to the easing of equipment price burdens. Although Dubai crude oil prices show a slight decline compared to the previous year, the fiscal breakeven prices of major oil-producing countries mostly remain below $70, so concerns about reduced fiscal capacity are low.”

Samsung Electronics’ facility investments are expected to be maintained at levels similar to last year. The company’s non-petrochemical sector orders are also expected to continue on a stable trend. Orders for Samsung Biologics’ 5th plant, targeted to begin construction in the first quarter, are also anticipated. If some of the seven projects currently undergoing FEED transition to EPC, achieving the order guidance is expected to be feasible.

Researcher Shin stated, “Although the stock price has risen since the beginning of the year due to overseas order expectations and last year’s performance exceeding guidance, it is still in an undervalued range. Once the order results of major projects begin to be confirmed in earnest, there is ample room for further price increases.”