Hanwha Investment & Securities projected on August 26 that Samsung E&A will experience stable performance growth over the next two to three years due to increased orders stemming from expanded investments by its group companies. The firm maintained its 'buy' rating and target price of 70,000 won.
Song Yu-rim, an analyst at Hanwha Investment & Securities, stated, "With proven profitability and project execution capabilities, the volume of orders from group companies is significantly increasing," adding, "We expect stable performance trends to continue over the next two to three years."
The analyst particularly noted that Samsung E&A has raised its order target for group companies from 3 trillion won to 7 trillion won this year. The company plans to review an upward adjustment of its annual new order forecast, which currently stands at 12 trillion won, in the third quarter.
Song remarked, "Considering the expansion of group company orders, this year's revenue and operating profit are likely to exceed the company's projections comfortably," and added, "As the first quarter saw a significant rebound in related company sales, expectations for performance in the second half of the year are high."
For the second quarter, Samsung E&A reported consolidated revenue of 2.6 trillion won, a 19.8% increase from the same period last year, while operating profit rose 51.0% to 273.1 billion won. The operating profit exceeded market expectations of 218.8 billion won by 24.8%.
The growth in performance was driven by increased orders and sales from related companies. Revenue in the advanced industry sector surged 42% year-on-year in the second quarter, with an operating profit margin of 10.5%. For the first half of the year, the company achieved 64% of its annual new order forecast, 49% of its revenue target, and 58% of its operating profit goal.
Song also analyzed that in the second half of the year, not only group company orders but also overseas orders are expected to rise. Key potential projects include the $3.5 billion ammonia project in Saudi Arabia, the $2.5 billion urea project in Qatar, and the $2 billion methanol project in Mexico.
He added, "The performance of orders in the chemical engineering sector will be a variable in determining the extent of annual forecast adjustments," but noted, "Given the substantial overseas order pipeline in the second half, we can expect the largest new orders in history."
* This article has been translated by AI.
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