Samsung E&A, a leading engineering corporations in Korea, is drawing attention as the biggest beneficiary of Middle East reconstruction. Samsung E&A is seen as highly competitive in winning energy infrastructure rebuilding contracts thanks to its extensive experience with large-scale construction in the Middle East. Expanded semiconductor investment by the group is also a positive.
According to the construction industry on the 9th, Samsung E&A's order backlog as of the end of last year totals 17.7562 trillion won. Of that, 51% is concentrated in the Middle East and North Africa. Next are Korea (25%), Asia (9%), Europe (8%), and the Americas (7%).
Most of the major overseas orders are construction projects for petrochemical plants of Middle Eastern energy corporations. ▲ Saudi Arabia Aramco Fadhili gas (total order aggregates 8.6973 trillion won) ▲ United Arab Emirates (UAE) ADNOC Refining CFP refinery (3.0937 trillion won) ▲ UAE ADNOC Refining CBDC refinery (3.0274 trillion won) ▲ Saudi Aramco HUGRS gas (2.5566 trillion won) are representative.
Petrochemical plants are refining, gas, and petrochemical production facilities, and are Samsung E&A's core business institutional sector. Samsung E&A's chemical institutional sector revenue in the first quarter of this year was about 1.1299 trillion won, accounting for 50% of total revenue. In addition, the business is divided into "advanced business," which builds industrial facilities such as semiconductor and display plants, and "new energy," which establishes facilities for LNG (liquefied natural gas), hydrogen and ammonia clean energy, and water treatment.
The industry expects Samsung E&A to win a significant portion of Middle East reconstruction work. Kim Seung-jun, an analyst at Hana Securities, said, "Samsung E&A is likely to see reconstruction demand centered on Qatar, Bahrain, and Kuwait," and noted, "Orders are expected mainly for projects previously carried out, such as BAPCO, a state-run energy corporations in Bahrain, and Kuwait National Petroleum Company (KNPC)." The BAPCO refinery in Bahrain, which Samsung E&A won in 2018 and completed last year, caught fire in Mar. after an Iranian attack.
Bae Se-ho, an analyst at iM Securities, said, "Given that only a very small number of EPC companies (firms that handle engineering, procurement, and construction for large plant projects) continue to operate in the Middle East, Samsung E&A is expected to demonstrate the strongest competitiveness among domestic builders when Middle East reconstruction gains full momentum."
Samsung E&A has also secured a large pipeline of major projects. Plant projects such as blue ammonia in Saudi Arabia, urea in Qatar, low-carbon methanol in Mexico, and biodegradable plastics at Falcon in the United Arab Emirates are seen as highly likely to lead to orders. Expanded group investment is also a boon. With Samsung Electronics resuming semiconductor investment, construction volumes related to advanced industries, including P5, are expected to increase. According to the Financial Supervisory Service's electronic disclosure system, Samsung Electronics accounted for 22.04% (1.9899 trillion won) of Samsung E&A's sales last year. No. 1 was Saudi Aramco (31.43%).