[Click eStock] "Samsung E&A, Rebound Expected as Uncertainty Clears... Target Price Maintained"

Strengthening Growth Foundation through Structural Improvements and New Projects
Expecting Bottom-Heavy Performance Trend after Uncertainty Resolution
Potential Rebound Noted with Strategy Disclosure Following Earnings Announcement

KB Securities analyzed on the 7th that Samsung E&A is preparing for a rebound in 2025 after a sluggish stock performance in the second half of 2024. They maintained a target price of 27,500 KRW and a 'Buy' investment rating. The target price is based on a 12-month forward price-to-book ratio (PBR) of about 1.1 times.

According to KB Securities, Samsung E&A's stock price sharply declined in the second half of 2024 due to a combination of negative factors including uncertainty in the order market caused by falling oil prices, concerns over reduced investments from affiliates, and delays in shareholder return policies. In particular, the lack of a decision on resuming shareholder returns throughout the year was identified as a key factor dampening investor sentiment. However, it is expected that the possibility of a rebound will increase once the company’s response strategy is disclosed in the earnings announcement scheduled for the end of January.

Samsung E&A is understood to have recorded new orders exceeding 14 trillion KRW in 2024, surpassing the annual guidance of 12.6 trillion KRW. It is also expected to maintain a stable order flow with annual orders projected at around 11 to 12 trillion KRW in 2025. This achievement was made through expanding the global order pool and securing new projects despite a decrease in affiliate volumes, representing a clear level-up compared to the average annual orders of 8.6 trillion KRW from 2017 to 2023.

The 4th quarter 2024 earnings are forecasted to slightly miss market expectations with consolidated sales of 2.46 trillion KRW (-13.0% YoY) and operating profit of 178.6 billion KRW (-33.8% YoY). This is analyzed to be influenced by the settlement effects of some completed projects and the weak Korean won, as well as the possibility of preemptive cost recognition in preparation for earnings decline. However, from 2025 onwards, structural improvements and expansion of new orders are expected to drive a full-scale earnings rebound.

Jang Moon-jun and Kang Min-chang, researchers at KB Securities, stated, "We expect uncertainties to be resolved and a bottom-to-top trend in 2025. In particular, with an increase in order backlog, securing new projects, and cost reduction efforts, the company is expected to build a long-term growth foundation."