[Click eStock] "Samkang M&T, Increased Earnings Visibility This Year"

[Asia Economy Reporter Kwon Jae-hee] Eugene Investment & Securities maintained a buy rating and a target price of 40,000 KRW for Samkang M&T on the 17th.

Samkang M&T's consolidated sales for the fourth quarter of last year were 151.9 billion KRW, and operating profit was 5.7 billion KRW, representing increases of 47% and 482.3% respectively compared to the previous year. However, net loss was recorded at 99.4 billion KRW due to a large-scale asset impairment of about 90 billion KRW recognized in the valuation of production facilities of its consolidated subsidiary, Samkang S&C.

This year, sales and operating profit are estimated to increase by 30% and 102.4% year-on-year to 652 billion KRW and 53.5 billion KRW, respectively. Last year's orders reached 1.4 trillion KRW, and the year-end order backlog was 1.7 trillion KRW, securing work for the next two years. Additionally, amortization expenses have decreased due to the big bath, and compensation for change orders on offshore wind power substructures, which should have been reflected at the end of last year, is expected to be recognized in the first half of this year.

Researcher Han Byung-hwa of Eugene Investment & Securities analyzed, "There are now buffers in place to absorb unexpected cost increases and other issues."

The integration of Samkang M&T into the SK Group affiliates is also expected to proceed smoothly. The inclusion of Samkang M&T into SK Group affiliates has been approved, and the change in the largest shareholder of the defense business operator has been officially reported. The remaining procedure is the final execution of the reclamation business rights purchased for the new offshore wind power substructure factory. Since the existing owner, Sungdong Shipbuilding & Marine Engineering, is undergoing a workout process, the related procedures are taking time, but it is expected to be finalized within the first half of the year. Expansion will begin before and after this procedure is finalized. The arrival of the full-scale installation cycle in the domestic offshore wind power market is also positive.

Researcher Han stated, "Among President-elect Yoon Seok-yeol's pledges, the renewable energy target share for 2030 is 25%, and to achieve this, offshore wind power installation must exceed the existing plan of 12 GW," adding, "We believe that the corporate value of Samkang M&T, the absolute leader in the global offshore wind power substructure market, does not yet reflect the high growth of the offshore wind power market."

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