[Click eStock] "Samsung C&T, Consecutive Earnings Surprises... Will Be a Catalyst for Stock Price Increase"

[Asia Economy Reporter Myung-Hwan Lee] Daol Investment & Securities announced on the 28th that it maintains a Buy rating and a target price of 150,000 KRW for Samsung C&T. This is because Samsung C&T posted better-than-expected strong earnings in the second quarter of this year despite a challenging environment, following the previous quarter.

Samsung C&T's operating profit for the second quarter of this year recorded 555.9 billion KRW, a 31% increase compared to the same period last year. The decrease in operating profit of 61 billion KRW in the trading division compared to the previous quarter was offset, resulting in an overall increase in operating profit. Additionally, a gain of 125 billion KRW from the disposal of an affiliate occurred due to Samsung Bioepis being reclassified as a subsidiary, leading to net profit exceeding estimates by about 35%, according to Daol Investment & Securities.

Looking at each division, the decrease in profit in the trading division compared to the previous quarter was expected. This was explained as the effect of resource price adjustments and the disappearance of a one-time sale gain of about 40 billion KRW. The fashion division continued to see growth due to online expansion and strong performance of imported brands. The effect of fixed cost reduction efforts such as store efficiency improvements was also reconfirmed.

The food and beverage division is considered to have completed reflecting the impact of profit margin decline due to competitive bidding. The effect of efforts to strengthen cost competitiveness was confirmed. The leisure division saw increased sales and operating profit as visitors to parks and golf courses rose. Daol Investment & Securities expects the division to turn profitable this year if social distancing policies remain unchanged.

The construction division recorded sales of 3.36 trillion KRW, a 26% increase compared to the same period last year, and operating profit of 155 billion KRW, a 37% increase. Daol Investment & Securities raised its operating profit forecast for the construction division this year to 623 billion KRW. This is because major projects have been fully underway, increasing sales, and 73% of the annual order target was achieved in the first half of the year. High-tech orders with high profitability were already secured at 5.3 trillion KRW in the first half, and additional orders are expected in the third quarter, supporting profitability defense.

Researcher Han-Ki Kim of Daol Investment & Securities said, "Following the previous quarter, the business competitiveness was reaffirmed through a core business performance surprise," adding, "Strong earnings exceeding expectations again in a difficult macro environment provide another opportunity for the stock price to rise."

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