[Edaily Reporter Kwon Oh Seok ] IBK Investment & Securities announced on the 29th that it is maintaining its “Buy” rating and target price of 60,000 won for #SamsungE&A.

Cho Jung-hyun, an analyst at IBK Investment & Securities, stated, “At this point, the semiconductor industry is recording the strongest cash flow growth among single-order industries,” adding, “While the order guidance for the high-tech (semiconductor) sector stands at 3 trillion won, we believe it is highly likely to exceed 6 trillion won annually based on our estimates. This is because SamsungElectronics, a key client, has entered a phase where its investment cycle is resuming starting this year, and the early groundbreaking for SamsungElectronics’ P5 Phase 2 (Production Line 2 at Plant 5 on the Pyeongtaek Campus) is expected in July.”
He added, “We believe that order momentum in the chemical engineering and new energy sectors is most likely to be seen first in water treatment projects in the Middle East. The bidding results are expected to become clear during the second or third quarter, and the project is estimated to be worth around 1 trillion won,” he explained, adding, “Other projects in the order pipeline for the second half of the year include the Saudi SAN-6 ammonia project ($3.5 billion), the Qatar Urea project ($2.5 billion), and the Mexinol blue methanol project in Mexico ($2 billion).”
Analyst Cho added, “On the other hand, since LNG projects typically proceed through the FEED (front-end engineering design, used to calculate unit prices) phase until early next year before moving on to FID (final investment decision), it is reasonable to expect full-scale EPC (engineering, procurement, and construction) orders to begin in the first half of next year or later.”
Second-quarter operating results are estimated at 2.4 trillion won in revenue (up 8.8% year-over-year) and 214 billion won in operating profit (up 18.2%). He assessed, “If revenue recognition in the high-tech industry sector accelerates faster than initially expected due to the accelerated start of semiconductor plant construction, results could exceed expectations.”
He continued, “EPC companies’ stock prices react most strongly when the client’s investment cycle begins. Given that SamsungE&A’s order guidance is conservative in a phase where both the client’s cash flow and investment rationale are improving simultaneously,” he added, “we expect the stock price to react strongly if a sharp increase in orders is confirmed.”