KB Securities said on the 3rd that Samsung C&T is securing a new growth engine in the construction institutional sector through its nuclear power business. It maintained a "Buy" investment rating and raised its target price to 360,000 won from 340,000 won. Samsung C&T's closing price the previous day was 291,000 won.
Jang Mun-jun and Kang Min-chan, analysts at KB Securities, said, "We raised the target price to reflect a rise in operating value from this year's profit recovery in the construction institutional sector," adding, "We estimate this year's revenue at 43.9 trillion won, up 7.6% from a year earlier, and operating profit at 3.9488 trillion won, up 20%."
Analyst Jang noted that Samsung C&T is pursuing nuclear power projects such as small modular reactors (SMRs). Jang said, "What stands out is that, rather than partnering with a single engineering firm, it is pushing separate projects with NuScale and GVH, representative Generation 3.5 SMR developers," adding, "When the SMR market expands, it appears to be pursuing a strategy to become the most flexible engineering, procurement and construction (EPC) corporations that can respond regardless of reactor model."
They also projected that a new shareholder return policy is expected this month. With the third three-year shareholder return policy having ended last year, they judged that, beyond the existing policy centered on returning 60%–70% of affiliate dividend income and canceling treasury stock, additional shareholder returns based on operating cash flow are reasonably expected.
Jang said, "Given the potential recovery in the construction institutional sector's earnings and heightened shareholder return demands from domestic investors, there is a high likelihood that a more shareholder-friendly return policy will be announced," adding, "Even excluding any rise in the equity value of Samsung Electronics and bio affiliates, there is sufficient investment appeal when considering the strong push on the nuclear power business."