[Edaily Reporter Kim Kyung-eun ] On the 4th, KB Securities raised its target price for #SamsungE&A by 8.6% from 81,000 won to 88,000 won, citing the company’s strengthening competitiveness in design and construction based on artificial intelligence (AI) and modular construction methods. The firm maintained its “Buy” rating and designated the stock as its top pick in the construction sector.

Jang Moon-jun, an analyst at KB Securities, stated in a report released that day, “SamsungE&A is transforming itself from a traditional engineering, procurement, and construction (EPC) firm that reacts to variables into an EPC firm that proactively controls them,” adding He added, “Although the stock price has risen rapidly recently, there is no reason it cannot exceed the price-to-book ratio (PBR) of 3.2 times seen in 2018, when the company was recovering from a long period of financial distress and returning to normal operations.”

This target price increase reflects an adjustment to the return on equity (ROE) forecast based on improved profitability. KB Securities raised the ROE used in its target price calculation from 16.7% to 16.9% and applied a 12-month forward PBR of 3.21 times. This represents an upside potential of 42.9% compared to the closing price of 61,600 won on the 3rd.

KB Securities analyzed that SamsungE&A’s recent stock price strength stems not merely from improved earnings or increased order intake, but from changes in the business structure itself. In particular, the firm explained that the adoption of AI-driven design automation and the expansion of modular construction methods are enhancing project execution capabilities, which in turn is leading to improved profitability.

SamsungE&A’s gross profit margin in the chemical engineering and new energy sectors is projected to rise from 9.0% in 2019 to 18.1% this year. During the same period, the average number of bidders per project decreased from six to two. The proportion of direct contracts—where the client selects the contractor directly rather than through competitive bidding—and repeat orders is also increasing.

Researcher Jang explained, “While this level of profitability would typically signal margin pressure or a decline in orders in a traditional EPC environment, SamsungE&A is actually seeing an increase in order volume,” adding, “This means clients are willing to pay a premium based on their confidence that the company can adhere to construction schedules and budgets.”

He cited AI and modular construction methods as the core drivers of competitiveness. SamsungE&A has been systematically accumulating project data since 2017 and adopted digital transformation as a management strategy in 2020. Since then, it has established a Palantir-based design automation system to minimize errors and trial-and-error during the design phase before actual construction begins.

Modular construction methods are also contributing to improved profitability. Traditional EPC projects rely heavily on on-site work and are therefore susceptible to external variables such as weather and labor supply. In contrast, SamsungE&A is expanding its approach of designing plants in modular units, manufacturing them in factories, and assembling them on-site. Analysts note that this approach shortens construction timelines and reduces cost volatility.

Researcher Jang explained, “The advancement of design through AI and the expansion of modular construction methods are leading to stronger project control,” adding, “A virtuous cycle resulting in high margins and repeat orders has elevated SamsungE&A to a higher tier among EPC companies.”

The earnings outlook is also positive. KB Securities forecasts SamsungE&A’s revenue for this year at 11.426 trillion won and operating profit at 1.408 trillion won—representing increases of 26.5% and 77.8%, respectively, compared to last year. For next year, revenue and operating profit are projected at 14.685 trillion won and 1.463 trillion won, respectively.

An expansion in new orders is also anticipated. KB Securities forecast that SamsungE&A will secure new orders totaling 18 trillion to 20 trillion won annually from this year through 2028. Accordingly, the company’s order backlog is expected to expand to the 32 trillion to 33 trillion won range.