"Stock Prices Have Fallen 30%, But"... This Company Is Expected to Benefit from the Government and Samsung Electronics

[Financial News] Samsung E&A, formerly Samsung Engineering, has recently come under pressure, but some analysts say that now is actually the time to buy. They believe two strong backers — the government's semiconductor push and Samsung Electronics' resumption of investment — will translate into order momentum in the second half of the year.
According to the Korea Exchange on the 2nd, Samsung E&A's stock surged this spring on hopes for reconstruction in the Middle East. As expectations grew for an end to the conflict between the United States and Iran, the stock hit an intraday high of 67,300 won on May 7, setting a new 52-week high.
But as the reconstruction theme faded, the stock began to slide. On the 26th of last month, it fell to 39,550 won, briefly breaking below the 40,000-won mark. It closed at 51,700 won on the 1st, still 30.17% below its peak.
Sentiment has since improved as the government's policies on Artificial Intelligence (AI) have become more concrete. Late last month, the government held the Southwest Region Advanced Industry Development Vision National Report Meeting and announced a growth strategy to support Samsung Electronics and SK Group's plan to invest a combined 895 trillion won.
In particular, the government said it would cut the time needed to build semiconductor industrial complexes from the usual 10 years to less than five years. It also plans to cover up to 100% of the cost of building key infrastructure such as power and water systems.
Backed by those policy expectations, Samsung E&A's stock jumped 14.95% on the 29th of last month and another 8.61% on the 1st of this month.
Brokerages have also responded positively. Kiwoom Securities raised its target price for Samsung E&A from 67,000 won to 72,000 won, saying the company is likely to see stronger group-level orders in the second half and may also raise its order guidance. It forecast second-quarter operating profit at 210.8 billion won, up 16.5% from a year earlier and in line with the market consensus of 217.7 billion won. Although some Middle East sites faced higher costs due to alternative shipping routes, the firm said those expenses were covered within contingency funds and would not have a major impact on margins.
The key issue is orders in the second half. Kiwoom Securities noted that the government has shortened the construction schedule for semiconductor fabs planned in the Capital Region, and decided to build Pyeongtaek P5 and P6 simultaneously rather than sequentially.
Shin Dae-hyun, a researcher at Kiwoom Securities, said, "The government has announced plans to shorten the construction period for semiconductor fabs planned in the Capital Region," adding, "This aligns with the possibility of Samsung Electronics breaking ground on P6 within the year, which makes an order for P6 in the second half of the year a realistic expectation." He added that with Phase 2 of the Southwest Region fab and Taylor Fab 2 also under discussion, advanced industry orders could continue in the medium to long term if the semiconductor cycle holds up.
Shin also said, "Given the government's and Samsung Electronics' investment stance, there is a high chance that order guidance centered on advanced industries will be raised," and added, "The chemicals and new energy segments also have multiple pipelines, and if Middle East reconstruction is factored in, strong orders are expected this year and next year, leaving room for further stock gains."
fair@fnnews.com Han Young-joon Reporter