[Click eStock] "Samsung Engineering, Increased Sales Contribution from Mexico and Malaysia Petrochemical... Target Price Raised"

[Asia Economy Reporter Hwang Yoon-joo] Kiwoom Securities diagnosed on the 27th that Samsung Engineering's sales proportion of large overseas sites with good profitability is gradually increasing, and orders from non-chemical affiliates are also rising. Accordingly, the investment opinion was upgraded to 'Buy' with a target price raised to 32,000 KRW.

Researcher Cho Young-hwan of Kiwoom Securities stated, "Operating profit in the first quarter recorded 174.4 billion KRW, a 62.6% increase compared to the same period last year, and the company's total sales also increased by 41.3%, significantly exceeding market consensus."

Researcher Cho explained, "The progress rate of large chemical sites is increasing faster than expected (Mexico DBNR, Malaysia Sarawak, etc.), and non-chemical sales have rapidly progressed based on the significantly increased orders in the fourth quarter of last year."

Mexico DBNR (4.5 trillion KRW), Saudi Huwaiya Unaiza (2.2 trillion KRW), and Malaysia Sarawak (1.3 trillion KRW) are large overseas projects ordered between 2019 and 2020.

Researcher Cho analyzed, "In particular, Mexico DBNR and Malaysia Sarawak are relatively profitable Feed to EPC (Engineering, Procurement, and Construction) projects," adding, "As their sales proportion increases, the chemical cost ratio has shown an improving trend compared to the previous quarter since last year."

He also said, "Non-chemical orders exceeded 1 trillion KRW again this quarter following the previous quarter, as Samsung Electronics' semiconductor factory (P3, P4) expansion orders were actively secured," and predicted, "Since non-chemical projects generally progress faster than chemical ones, the sales growth rate is expected to accelerate further."

However, rising raw material prices were cited as a variable. Researcher Cho said, "There is some concern that overall profitability may decline due to rising raw material prices," but added, "It is positive that the impact related to raw materials is being offset by hedging price fluctuation risks through futures contracts for some raw materials (copper, copper, etc.)."

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