Heungkuk Securities said on the 5th that for Samsung C&T, while the bio institutional sector will continue to lead earnings next year, earnings in institutional sectors such as construction, which had been sluggish, are expected to improve. It maintained a Buy rating and raised its target price to 320,000 won from 290,000 won. The previous day's closing price of Samsung C&T was 240,500 won.
Heungkuk Securities estimated that in the fourth quarter of this year (October–December), Samsung C&T will post 10 trillion won in sales and 758.9 billion won in operating profit on a consolidation basis. Sales fell 0.3% from a year earlier, while operating profit rose 19.5%.
Researcher Park said, "The continued weakness in topline is due to sluggishness in the construction and leisure institutional sectors," adding, "In operating profit, the strong performance of the bio institutional sector (full operation of Plant 4 and solid sales) is offsetting the weakness in the other business institutional sectors."
However, next year, excluding the trading institutional sector, improvements across all business institutional sectors are expected to solidify profit generation. With the bio institutional sector leading results, consumer goods institutional sectors that had been sluggish—construction and fashion, leisure, and food and beverage—are also expected to improve, strengthening cash generation.
Researcher Park said, "In the bio institutional sector, Plant 5, completed in April this year, will begin operations next year, and solid results are likely thanks to increased production capacity and higher sales volume," adding, "The construction institutional sector will also break out of its prolonged slump on the back of solid order intake at home and abroad and the securing of housing construction rights."
Park added, "We raised our target price for Samsung C&T in light of the rise in the value of investment assets such as Samsung Electronics, Samsung Life Insurance, and Samsung Biologics," noting, "Despite the sharp rally since April this year, the price-earnings ratio (PER) and price-to-book ratio (PBR) stand at 16.2 times and 0.9 times, respectively, so buying at the current price range is still valid."