[Click eStock] "SAMSUNG E&A's Business Restructuring Viewed Positively... Target Price Raised to 42,000 Won"

Orders from Group Companies Also on the Rise

On January 29, Kiwoom Securities gave a positive assessment of SAMSUNG E&A's business restructuring plan, raising its target price to 42,000 won and maintaining a 'Buy' investment rating.

Shin Daehyun, an analyst at Kiwoom Securities, stated, "SAMSUNG E&A's announced restructuring into three divisions-petrochemicals, advanced industries, and new energy-is viewed positively," adding, "Given the potential for new businesses to attract attention within the company's restructured portfolio, the company is undervalued compared to global peers (competitors)."

Analyst Shin further explained, "There were concerns about orders in the existing petrochemical division due to the downturn in the traditional petrochemical business, which was impacted by falling oil prices and an oversupply in the chemical industry." He continued, "By separating out new energy businesses such as LNG, SAF, blue and green hydrogen/ammonia (including CCS), which SAMSUNG E&A has presented as mid- to long-term growth opportunities, the company can now demonstrate its growth potential in numerical terms."

SAMSUNG E&A's robust order pipeline was also highlighted as a positive factor. Last year, the company secured SAF orders in Malaysia, low-carbon ammonia in Wabash, USA, and Abadi LNG FEED in Indonesia. It also holds a strong order pipeline with high potential, including the Pacifico Mexinol project (USD 2 billion) and the UAE Falcon PLA EPC rollover (USD 2 billion).

Additionally, Shin noted that a significant increase in group company investments could serve as an additional momentum driver. Since the third quarter of last year, orders from group company Samsung Electronics have been on the rise. Following the P4 Ph4 order, orders for Ph 1 to 3 have been received, along with a new order for the Giheung research line construction. Furthermore, on December 30 of last year, an additional order for P5 was secured. The P5 framework construction is scheduled to resume in February, with completion targeted for the second half of next year and operations beginning in 2028. Shin predicted, "While P1 to P4 were constructed as two-story buildings, P5 is planned as a three-story structure, so the total investment is likely to increase compared to previous projects."

Shin also commented, "There are still high expectations for the sixth plant of Samsung Biologics," adding, "According to media reports, construction of the sixth plant and the third campus of Samsung Biologics is scheduled to begin this year, with the scale expected to match the fifth plant at 18L."