[Click eStock] "Samsung C&T Still Undervalued... Target Price Raised"

On June 9, Hana Securities maintained its view that Samsung C&T remains undervalued and raised its target price from 600,000 won to 650,000 won. The investment opinion remains 'Buy'.

Kim Seungjun, an analyst at Hana Securities, stated, "Even though the stock price has recently risen, Samsung C&T’s valuation is still low. When reflecting the current share price of Samsung Electronics, the price-to-book ratio (PBR) is 0.7 times. Considering the premium from its investments in nuclear power, solar power, and affiliates, we recommend buying Samsung C&T."

According to Hana Securities, the current consensus-based PBR for Samsung C&T is 1.4 times. However, the main controlling stake of Samsung C&T in current market estimates does not reflect the increase in the value of its Samsung Electronics stake. Kim added, "Samsung Electronics' share price has risen by about 160,000 won compared to the end of the first quarter. Considering the 300 million shares held by Samsung C&T, this resulted in an increase of about 48 trillion won in stake value. Samsung Life Insurance’s share price also rose by 200,000 won compared to the end of the first quarter, and with 38.69 million shares held, the stake value increased by about 7.8 trillion won." He continued, "Taking these into account, the main controlling stake of Samsung C&T is 106 trillion won, which is significantly higher than the current consensus of 52 trillion won. The 0.7 times PBR reflects this value in the valuation."

A PBR of 0.7 times is much lower than that of other holding companies (SK 1.4 times, SK Square 3.3 times, Doosan 18.7 times, CJ 1.2 times) and is also lower compared to construction companies with a market capitalization of over 1 trillion won (Hyundai Engineering & Construction 1.7 times, SAMSUNG E&A 1.8 times, Daewoo Engineering & Construction 2.4 times). Kim noted, "There are abundant narratives that could justify a valuation premium, including rising quarterly profits this year, the accelerating pace of semiconductor investment and corresponding sales growth expectations, nuclear power orders, growth in Raemian's orders, and the expansion of U.S. solar power operations."

The nuclear power segment is expected to come into the spotlight in the third and fourth quarters of this year. Kim predicted, "In the third quarter, there will likely be a bidding process for the selection of a Team Korea contractor in Vietnam, and Samsung C&T is expected to participate. In addition, if a large-scale or small modular reactor (SMR) investment in the U.S. materializes in the form of Team Korea in July, Samsung C&T could draw attention." He added, "In the fourth quarter, there is also the potential for a large-scale nuclear power order in Romania. Furthermore, SMR orders in Europe are expected in 2027, so the nuclear power storyline will continue from the second half of this year through next year."

This content was produced with the assistance of AI translation services.