IBK Investment Securities reaffirmed its buy rating and target price of 60,000 won for Samsung E&A (KOSPI: 028050) on the 29th.
The brokerage estimates Samsung E&A's second-quarter revenue at 2.4 trillion won, up 8.8% year on year, with operating profit of 214 billion won, a rise of 18.2%. Both figures are broadly in line with the market consensus of 218.5 billion won.
IBK noted that if revenue recognition in the advanced industries segment accelerates on the back of faster-than-expected semiconductor fab construction starts, results could exceed expectations.
Although Samsung E&A's official order guidance for its advanced industries — principally semiconductor-related construction — stands at 3 trillion won for the year, IBK believes the figure is likely to surpass 6 trillion won. The brokerage cites the resumption of Samsung Electronics' investment cycle in 2025 and the anticipated early groundbreaking of the second P5 plant at Samsung's Pyeongtaek campus in July as the key drivers.
On the petrochemical and new energy front, IBK expects the results of bidding on a Middle Eastern water-treatment project, valued at roughly 1 trillion won, to become clear sometime in the second or third quarter.
The order pipeline for the second half of the year includes Saudi Arabia's SAN-6 ammonia project ($3.5bn), a Qatari urea project ($2.5bn), and a blue methanol project in Mexico ($2bn). Full-scale EPC (engineering, procurement and construction) orders for LNG projects are not expected to materialise until the first half of next year at the earliest.
Samsung E&A's shares closed at 41,450 won on 26th June, implying upside of 44.8% to IBK's target price.