[Click e Stock] "Samsung Engineering, Order Backlog Expansion Expected"

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained its 'Buy' rating and target price of 25,000 KRW for Samsung Engineering on the 4th, expecting the order backlog to increase further this year.

Kim Chi-ho, a researcher at Korea Investment & Securities, said, "The performance was lower than market expectations due to additional costs reflected at overseas sites," adding, "Approximately 20 billion KRW of additional costs were reflected at the Kuwait petrochemical plant site, causing the gross profit margin of the petrochemical division to fall by 4 percentage points compared to the previous quarter." Samsung Engineering recorded sales of 1.8 trillion KRW, up 9% year-on-year, and operating profit of 67 billion KRW, up 18%, in the fourth quarter of last year.

This year, the company's expected order amount is estimated at 10.5 trillion KRW, a 49% increase from last year. The company's accumulated order backlog last year was 14.2 trillion KRW, the highest since 2013. Researcher Kim said, "Projects within sight in the US, Mexico, and Malaysia alone amount to 5 trillion KRW," adding, "Profitability is expected to be favorable due to EPC (Engineering, Procurement, and Construction) orders linked to basic design."

He continued, "The recent stock price has been sluggish due to the overall contraction in investment sentiment in the construction sector and concerns about the coronavirus," and said, "Since the order backlog is expected to reach a record high this year, it is considered a buying opportunity."

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