KB証券 said on the 23rd that growth is expected for Samsung C&T(028260) on the back of strong sales across all institutional sectors and expansion of its nuclear power generation business. It kept its investment opinion at "Buy" and raised its target price by 22.5% to 490,000 won from 400,000 won. The previous trading day's closing price was 354,000 won.
KB証券 expects Samsung C&T's sales in the second quarter of this year to rise 10.4% on-year to 11.1 trillion won, with operating profit up 14.2% to 858.3 billion won. This is in line with market expectations (consensus). KB証券 said broad-based sales strength across all institutional sectors is set to drive solid results.
Jang Moon-jun of KB証券 said, "In the first half of this year, Samsung C&T's share price was driven by changes in the value of its equity holdings," adding, "Going forward, in addition to simple changes in the value of equity holdings, we can gradually expect a narrowing of the net asset value (NAV) discount rate."
KB証券 applied a reduced NAV discount rate for Samsung C&T, cutting it to 40% from 45%. It said this is because this year marks the restart of concurrent growth in top line and profit, and meaningful business expansion is set to kick off based on a differentiated track record in the nuclear power segment.
Jang positively assessed the small modular reactor (SMR) business strategy, a new growth engine for the construction institutional sector. Samsung C&T is not limiting itself to collaboration with a single engineering company but is pushing forward separate projects with leading 3.5-generation SMR developers such as NuScale and GVH (GE Vernova-Hitachi). The strategy is to position itself as an EPC (engineering, procurement and construction) corporations that can respond most flexibly regardless of reactor type as the SMR market expands.
Jang said, "The reason Korea has come into the spotlight in the global nuclear power industry is the experience from the Barakah Nuclear Power Plant project in the UAE, which Hyundai Engineering & Construction and Samsung C&T carried out together," adding, "As the large nuclear reactor and SMR markets expand, the number of clients naturally seeking Samsung C&T, which has a differentiated track record, will increase."