[Click eStock] "HDC Hyundai Development Company Records Strong 4Q Performance but Uncertainty Persists"

[Asia Economy Reporter Song Hwajeong] Samsung Securities maintained its investment opinion as 'Hold' on HDC Hyundai Development Company on the 21st, stating that although the company recorded favorable performance in the fourth quarter of last year, uncertainties are expected to persist.

On the previous day, HDC Hyundai Development Company announced that its standalone sales and operating profit for the fourth quarter of last year reached 1 trillion KRW and 160.1 billion KRW, respectively. These figures represent increases of 16.3% and 72.4% compared to the previous quarter. Baek Jaeseung, a researcher at Samsung Securities, analyzed, "Considering there is little difference from the consolidated performance, it is estimated that the consolidated operating profit also significantly exceeded the consensus. This is attributed to the reversal of approximately 15 billion KRW in provisions for defect repairs in self-developed projects, as well as improved profitability at sites nearing completion, resulting in historically highest profitability in contract projects."

However, Baek expressed the opinion that maintaining such profitability steadily in this year will be difficult. He said, "HDC Hyundai Development Company's sales volume last year was low at 6,392 units, and considering the temporary profit recognition due to the move-in timing of self-developed projects such as Yeongtong I-Park Castle Phase 1 and Cheongju Gagyeong in the second quarter of last year, both sales and operating profit in 2020 are inevitably expected to decrease compared to the previous year."

Baek added, "The changes in performance and financial status of the consolidated entity after the completion of the Asiana Airlines acquisition at the end of April can still act as a source of uncertainty."