[Market Feature] Seongkwang Bend Jumps Over 8% on Hopes of LNG Plant Expansion Benefits

The share price of Seongkwang Bend is on the rise, driven by expectations of benefiting from increased natural gas demand and facility expansion.

As of 9:23 a.m. on March 20, the shares of Seongkwang Bend were trading at 34,450 won, up 2,700 won (8.50%) from the previous trading day.

On this day, Hyundai Motor Securities initiated coverage on Seongkwang Bend with a "Buy" rating and a target price of 45,000 won. Seongkwang Bend is a company that manufactures large-scale pipeline fittings, which are essential components installed in refineries, petrochemical plants, and liquefied natural gas (LNG) plants.

Shin Donghyun, a researcher at Hyundai Motor Securities, explained, "Pipeline construction is essential not only for LNG production facilities but also for import terminals," and added, "Fitting demand can arise from both natural gas producers and consumers." In particular, due to the need for LNG liquefaction plant pipelines to withstand high pressure and low temperatures, they mainly use high-margin stainless steel fittings. Accordingly, it is expected that the overall profit margin will rise in the future.

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The earnings outlook is also bright. Researcher Shin said, "With the increase in orders for the Qatar LNG terminal in 2024 and the large-scale construction contracts in Saudi Arabia last year, the proportion of business in the Middle East has expanded. However, due to the final investment decision (FID) of the largest-ever LNG project in the United States last year, orders from the U.S. are expected to increase rapidly from this year."

Regarding the share price's potential for further gains, he added, "There is a lag of several months between last year’s investment decisions and the actual increase in orders and profits. Taking into account vendor selection, real performance improvement, and additional growth expectations from new investment decisions this year, the current share price is considered undervalued."

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