[Click eStock] “Samsung Engineering, Preparing for Mid- to Long-Term Growth”

The Only EPC Participating in the Green Ammonia Council Hosted by the Ministry of Trade, Industry and Energy
Hyundai Motor Securities Maintains Samsung Engineering Target Price at 30,000 Won

[Asia Economy Reporter Gong Byung-sun] Securities firms have predicted that Samsung Engineering's third-quarter earnings this year will exceed market expectations (consensus). It appears that the company is preparing for not only short-term growth but also mid- to long-term growth through eco-friendly businesses.

On the 1st, Hyundai Motor Securities estimated Samsung Engineering's third-quarter sales at 1.735 trillion KRW, an 8.2% increase compared to the same period last year, and operating profit at 116.7 billion KRW, a 16.6% increase over the same period. These figures exceed the consensus sales and operating profit of 1.7151 trillion KRW and 107 billion KRW by 1.16% and 9.1%, respectively.

With the conclusion of the contract with Al-Zubair in Iraq, settlement gains are expected to be reflected. Although there were no significant overseas orders in the third quarter except for the already disclosed 170 billion KRW industrial facility project in Europe, the reflection of settlement gains and cost improvement effects due to execution innovation occurred. Hyundai Motor Securities estimated Samsung Engineering's gross profit margin at 11%.

In the short term, the effect of increasing overseas orders remains valid. Large-scale projects expected by the end of this year include the $2.5 billion (approximately 2.965 trillion KRW) Jafurah project in Saudi Arabia and the $1.6 billion Russia BGCG project. Visible projects for next year include Zuluf, Khurais and Ghasha, Thailand gas, and Malaysia gas projects. If orders are secured by the second half, the 2023 sales estimates can also be revised upward.

In the mid- to long-term, eco-friendly businesses are considered future growth drivers. The company is preparing carbon neutrality and eco-friendly plastic projects, and has presented a pipeline of $11 billion in design, procurement, and construction (EPC) projects related to carbon zero by 2025. Researcher Kim Seung-jun of Hyundai Motor Securities explained, “Samsung Engineering is the only EPC company participating in the Green Ammonia Council recently held by the Ministry of Trade, Industry and Energy,” adding, “It can be evaluated as a leader in hydrogen-related fields among domestic EPC companies.”

Accordingly, Hyundai Motor Securities maintained a 'Buy' investment opinion and a target price of 30,000 KRW for Samsung Engineering. The closing price on the previous day was 25,550 KRW.

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