“It’s hard to find a growth stock with such clear prospects” ... Samsung E&A price target raised

[Financial News] On the 23rd, Hanwha Investment & Securities Co., Ltd. maintained its Buy rating on Samsung E&A, citing expectations that profit growth will continue, and raised its target price from 70,000 won to 84,000 won.
Samsung E&A’s third-quarter revenue was 2.9 trillion won and operating profit was 500.6 billion won, up 45.8% and 183.6%, respectively, from the same period a year earlier. Operating profit substantially exceeded the consensus estimate of 252 billion won.
Song Yu-rim, an analyst at Hanwha Investment & Securities Co., Ltd., said, “With sales to affiliates growing more strongly than expected, a 100 billion won reversal related to the Saudi Yanbu power plant, client incentive payments, and settlement gains from projects nearing completion, quarterly gross margin came to 21.5%.” She added, “Although bond-call costs at the Bahrain BMP project were recognized below operating income, leaving net income in line with consensus, the possibility of a reversal remains open depending on the outcome of future mediation.”
She went on to say, “It is still early in the improvement cycle to discuss an earnings peak, and it is hard to find growth this certain amid an uncertain macro environment.”
Samsung E&A raised its full-year guidance, increasing its order target from 12 trillion won to 19 trillion won, its revenue target from 10 trillion won to 11 trillion won, and its operating profit target from 800 billion won to 1.4 trillion won. Both new orders and operating profit are at record levels.
Song said, “The guidance puts fourth-quarter operating margin in the 13% range, above the 9.3% average over the past three years.” She added, “Revenue from affiliates and the hydrocarbon business is expected to rise in stages starting next year, so sustained earnings growth can reasonably be expected.”
She also noted, “The company disclosed plans to repurchase and retire treasury shares. Of the roughly 780 billion won in planned repurchases, 90 billion won is for purposes such as employee bonuses, while the remaining 690 billion won is to be repurchased and retired to enhance shareholder value.”

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