[Click eStock] "Samsung C&T, Q3 Earnings Disappointing but Expected to Rebound in Q4"

Temporary Slump Due to Completion of Large-Scale Projects in H1
Q4 Construction Sector Recovery Possible, Seasonal Peak and Heatwave Base Effects Expected
Recommended Low-Price Partial Buying... Value-Up Related Disclosures Also Anticipated

DS Investment & Securities analyzed on the 31st that Samsung C&T's third-quarter earnings were weaker than expected, but a rebound is possible in the fourth quarter. They maintained a 'Buy' rating and a target price of 190,000 KRW. Samsung C&T's closing price on the previous trading day was 129,900 KRW.

According to DS Investment & Securities, Samsung C&T's consolidated sales for the third quarter of 2024 were 10.3 trillion KRW, down 6.0% year-on-year, and operating profit fell 11.3% to 736 billion KRW, missing market expectations. The company explained that the quarterly performance was temporarily weak due to a base effect from the completion of large-scale projects in the first half of the year.

The construction division was hit hard, with sales declining 15% to 4.48 trillion KRW due to decreased sales in the high-tech and overseas power sectors. Sales dropped as high-tech projects such as Pyeongtaek P4 and Taylor T1 in the U.S. ended, causing the overall operating profit margin to fall to 5.3%. The cumulative orders to date stand at 10.2 trillion KRW, only about half of the initial guidance of 18 trillion KRW. However, additional orders were secured during the third quarter, including 1.2 trillion KRW for a Saudi combined heat and power plant, 500 billion KRW for solar power, 300 billion KRW for EPC, and 700 billion KRW for Yongsan Namyeong District 2, but it still appears unlikely to meet the guidance.

Except for the bio and food & beverage divisions, all other sectors experienced poor performance. The trading division saw sales decline 6.3% to 3.19 trillion KRW due to a slowdown in raw material demand, and operating profit decreased 1.4% to 71 billion KRW. The fashion division's sales and operating profit fell 5% and 36.4%, respectively, due to seasonal off-season and weakened consumption. The resort division also saw sales and operating profit drop 4.6% and 45.3%, respectively, affected by rain and heatwaves. On the other hand, the food & beverage division's sales increased due to growth in catering and food material distribution, and the bio division maintained growth with the continued ramp-up of Biologics Plant 4.

Researcher Kang Tae-ho of DS Investment & Securities stated, "Despite the temporary weakness in the construction division in the third quarter, a recovery is expected in the fourth quarter." He added, "We aim for additional orders through discovering opportunities in high-tech affiliates and semiconductor back-end construction and improving existing projects. The fashion division is entering the peak season, and the resort division is expected to recover due to the base effect of the heatwave. Additionally, the bio division is expected to continue its growth trend." He also said, "We anticipate value-up related disclosures within the year and recommend buying on dips during corrections."

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