Samsung E&A soars as brokerages raise price targets

Shares of South Korean engineering company Samsung E&A Co. surged nearly 7 percent early Friday, buoyed by a series of target price upgrades from local securities firms.

Samsung E&A shares were trading at 59,000 won ($44.61) as of 9:16 a.m., up 6.5 percent from the previous session.

The stock opened 1.62 percent higher at 56,300 won and briefly climbed 7.76 percent to 59,700 won shortly after the market opened.

Despite the main Kospi’s recent weakness, Samsung E&A shares have maintained their upward momentum for three consecutive trading sessions.

The gains appear to have been driven by a series of target price upgrades from securities firms following the company’s announcement on Thursday of third-quarter earnings that far exceeded market expectations.

Samsung E&A posted third-quarter operating profit of 500.6 billion won, roughly double market expectations.

The company also announced on the same day that it plans to repurchase 780 billion won worth of its own shares and retire 690 billion won worth of them.

Fourteen of the 15 securities firms that issued reports on Samsung E&A raised their target prices on Friday, with the average target price among them standing at approximately 78,133 won.

Separately, semiconductor stocks, including Samsung Electronics Co. and SK hynix Inc., plunged in early trading amid persistent concerns over the profitability of artificial intelligence (AI) investments.

Samsung Electronics dropped 3.73 percent at 206,500 won as of 9:06 a.m., while SK hynix slid 2.53 percent to 1.192 million won.

Related stocks also declined, with Samsung Electronics preferred shares down 3.77 percent, Samsung Life Insurance Co. falling 2.69 percent and Samsung C&T Corp. losing 3.99 percent.

SK square Co. was trading at 732,000 won, down 2.53 percent.

SK hynix announced before the regular trading session that it had suspended consideration of a U.S. stock market listing for its subsidiary Solidigm, an issue that had weighed on its share price.

However, the announcement was insufficient to reverse the stock’s decline.

The sharp losses in major semiconductor stocks also dragged down semiconductor materials, parts and equipment suppliers listed on the secondary Kosdaq market.

Jusung Engineering Co. fell 4.82 percent, EO Technics Co. dropped 5.37 percent, Leeno Industrial Inc. declined 5.61 percent and Wonik IPS Co. lost 5.08 percent.

The declines appear to reflect a sell-off in technology stocks in the U.S. market, following similar weakness in Korea, as concerns over the profitability of AI investments resurfaced.

Investor sentiment deteriorated sharply as earnings announcements from major technology companies intensified concerns about how they would finance their astronomical AI investment costs and generate sufficient returns to justify the spending.

Meta Platforms Inc.’s third-quarter free cash flow turned negative for the first time since its stock market listing, fueling concerns that the financial burden of AI investment may be exceeding companies’ internal cash-generating capacity.

This has also raised doubts about semiconductor demand, contributing to sharp declines in related Korean stocks.

“Selling pressure was concentrated in semiconductor and other AI-related stocks as Meta’s credit default swap (CDS) premium rose to an all-time high and credit risks among neocloud companies persisted,” said Seo Sang-young, an executive director at Mirae Asset Securities Co. “Supply-demand pressures also amplified the decline in technology stocks, with hedge funds’ short-selling leverage approaching its highest level in five years.“

Meanwhile, shares of DTS Inc., a manufacturer of special-purpose machinery, more than doubled their initial public offering (IPO) price in early trading Friday, the first day of trading on the secondary Kosdaq market.

DTS shares were trading at 37,400 won as of 9:07 a.m., up 102.16 percent from its IPO price of 18,500 won.

The stock opened at 32,350 won and briefly surged to 38,400 won during intraday trading.

DTS designs and produces air-cooled thermal management equipment used in liquefied natural gas (LNG) production facilities, oil refineries, petrochemical plants and power plants.

Air-cooled thermal management equipment uses air to dissipate heat generated by industrial facilities.