[Click eStock] "Samsung E&A, Increased Stock Volatility... Target Price Down"

Shinhan Investment Corp. on the 14th downgraded the target price of Samsung E&A from 40,000 KRW to 36,000 KRW, citing a period of increased short-term stock price volatility. The investment rating was maintained at 'Buy.'

Researcher Kim Sun-mi explained, "Considering the increased volatility at the order acquisition stage, we removed the 10% premium previously applied to the 10-year average multiple. Although the expansion of the proportion of negotiated contracts has improved the order success rate and profitability, the industry’s characteristic of relying on the client’s investment decisions means that order uncertainty will increase."

She added, "Both the chemical and non-chemical sectors are in a phase of increased volatility. While the already secured order volume is large, enhancing performance stability compared to 2023, prolonged absence of new orders is expected to weigh on the stock price."

Furthermore, she assessed, "The strong performance that supported the stock price until the first half of the year has shifted to a stabilization trend after the third quarter. It is expected that stock price recovery will only be possible around the end of the year when the results of energy transition projects become visible and the bidding volume for 2025 is confirmed."

The consolidated sales for the third quarter were estimated at 2.4 trillion KRW, with an operating profit of 175.5 billion KRW. The operating profit is about 5% below the existing consensus.