Hana Securities said on May 5 that opportunities to enter the LNG liquefaction plant market have expanded for Samsung E&A following the Middle East conflict and the closure of the Strait of Hormuz. It maintained a Buy rating and a target price of 67,000 won. The previous session's closing price is 49,500 won.
Hana Securities analyzed that while investments in LNG liquefaction plants continue in the existing North American and Qatari markets, a trend of expanding investment to Latin America and Africa is emerging.
Kim Seung-jun, a researcher at Hana Securities, said, "Samsung E&A has the capability to execute LNG liquefaction, given its experience with similar projects (gas pre-treatment facilities, NGL, storage tanks, ethylene liquefaction processes)," and noted, "In particular, ethylene EPC also involves liquefaction processes, and Samsung E&A has experience executing processes at minus 100–110 degrees."
However, given that its execution experience (references) in LNG liquefaction is limited, large-scale LNG projects are being pursued first through joint ventures (JV) with legacy EPCs, while small and mid-size LNG orders are being sought with technology-based partners, Kim said.
Kim said, "It is aiming for LNG liquefaction orders through references from petrochemical processes carried out with Honeywell," adding, "Samsung E&A is currently working with Honeywell UOP on the Wabash low-carbon ammonia project and the Crescent LC CCS project."
Kim analyzed that as the Iran conflict involving missiles and drones has intensified recently, creating a sense that Middle East reconstruction is being pushed back, Samsung E&A's share price has declined. However, Kim expected Samsung E&A's order opportunities to grow in the mid to long term.
Kim said, "Post-war Middle East reconstruction, Iran's development, and development benefits on other continents stemming from geopolitical shifts in energy supply and demand could emerge," and added, "This is a stock for long-term investment, and I recommend buying at the point when an end to the war between Iran and the United States becomes clear."