[Click eStock] "Samsung E&A Expected to Strengthen EPC and New Businesses... Target Price Raised"

On June 24, Kiwoom Securities maintained its 'Buy' investment rating on Samsung E&A, stating, "Given the company's strengthened EPC (Engineering, Procurement, and Construction) capabilities and expansion into new businesses, the current share price is undervalued." The target price was raised to 34,000 won.

Shin Daehyun, a researcher at Kiwoom Securities, commented, "Samsung E&A has steadily enhanced its contractor capabilities through operational innovation in traditional industrial EPC sectors such as gas and petrochemicals." He added, "At the recent Tech Forum, the company demonstrated its competitiveness as a plant contractor by presenting a real-world case study of the DBNR project."

The strengthening of Samsung E&A's operational capabilities is based on its proprietary innovation strategy, 'AHEAD.' Since 2018, the company has driven structural changes by introducing modular construction methods and precast (PC) methods. Currently, it continues to pursue productivity enhancement initiatives such as design automation using artificial intelligence (AI) and optimization of procurement activities. Shin assessed, "These changes have had a positive financial impact since 2023, and given their structural nature, the gross profit margin (GPM) is expected to remain at a high level going forward."

The expansion into new businesses is particularly noteworthy. Shin stated, "The company is strengthening its new business capabilities through recent investments in Nel and the formation of a SAF (Sustainable Aviation Fuel) technology alliance with companies such as Honeywell." He added, "Samsung E&A is diversifying its product portfolio into green hydrogen, ammonia, methanol, carbon capture, E-Fuel, and Waste to SAF. The company also plans to expand beyond simple EPC to include Pre-FEED (pre-front end engineering design) and licensing businesses over the mid- to long-term."

He projected, "This will enable the company to achieve higher margins, and when combined with improved construction capabilities, will create additional business opportunities and enhance profitability."

He continued, "Although the share price has risen 33% this year, the price-to-book ratio (PBR) for 2025 remains at 0.96 times. While short-term momentum may be limited, considering the high profitability resulting from improved operational capabilities and expansion into new businesses, the current share price is still undervalued." The target price was raised from the previous level, reflecting the valuation increase of global peers.