[Click eStock] Samsung C&T, "Fashion & Leisure 'Sluggish' Due to COVID, Construction & Bio 'Solid'"

1Q Operating Profit Expected at 147 Billion KRW... 40% Increase YoY

[Asia Economy Reporter Minwoo Lee] Samsung C&T's operating profit for the first quarter is expected to rise by 40% compared to the same period last year. Nevertheless, it fell short of market expectations due to the inevitable impact of COVID-19 on the fashion and leisure sectors, despite profit growth in the construction and bio divisions.

On the 23rd, Mirae Asset Daewoo forecasted that Samsung C&T would achieve sales of 6.96 trillion KRW and an operating profit of 147 billion KRW in the first quarter of this year. Compared to the first quarter of last year, sales decreased by 5.4%, but operating profit increased by 39.7%.

Profit growth in the construction and bio divisions was effective. The expected sales for the construction division in the first quarter are 2.642 trillion KRW, with an operating profit of 124 billion KRW. Sales decreased by 9.5% year-on-year, but operating profit increased by 19.2%. Researcher Jeong Daero of Mirae Asset Daewoo explained, "Currently, domestic high-tech and housing projects are operating normally. Some overseas projects have been temporarily suspended, causing sales deferral, and the suspended sites are in discussions with clients regarding extension of construction periods."

In the bio division, sales are expected to reach 207.2 billion KRW, with an operating profit of 51 billion KRW. Sales increased by 65.3% compared to the same period last year, and operating profit turned positive. This was likely due to changes in the product mix of factory production and increased sales volume of products from the second plant. The trading division is expected to record sales of 3.158 trillion KRW and an operating profit of 22.6 billion KRW. Both sales and operating profit decreased by 3.5% and 29.4%, respectively, compared to the first quarter of last year. Energy metals and lifestyle industries are sluggish, and there is a forecast that performance may further deteriorate due to reduced trade volume caused by COVID-19 and fluctuations in raw material prices after the second quarter.

Mirae Asset Daewoo maintained a 'Buy' investment rating and a target price of 152,000 KRW for Samsung C&T. The closing price the previous day was 97,000 KRW. Researcher Jeong said, "Concerns about performance decline in proprietary businesses due to COVID-19 are inevitable, but the value of affiliate shares held by Samsung C&T, such as Samsung Electronics and Samsung Biologics, has recovered to historically high levels, confirming that the company's market capitalization is undervalued. Depending on the content of the 'public apology' statement scheduled for next month on the 11th by Samsung Electronics Vice Chairman Lee Jae-yong, much of the uncertainty that had been considered a discount factor for Samsung C&T's corporate value from a governance perspective could be resolved."

This content was produced with the assistance of AI translation services.