[Featured Stock] Hanshin Gongyeong Rises on Expectations of Economic Stimulus Benefits Amid COVID-19 Recovery

[Asia Economy Reporter Hyungsoo Park] Hanshin Engineering & Construction is showing strong performance. It appears that an analysis report suggesting the company would benefit if the government undertakes economic stimulus measures has influenced the stock price.

As of 1:42 PM on the 6th, Hanshin Engineering & Construction is trading at 12,100 KRW, up 8.52% compared to the previous trading day.

Research Alom analyzed that attention should be paid to undervalued small and medium-sized civil engineering and construction companies. It is expected that the government will invest in construction infrastructure to overcome concerns about economic recession caused by the novel coronavirus disease (COVID-19).

Researcher Seonghwan Choi of Research Alom stated, "It is difficult to find anything as effective as construction infrastructure investment in boosting economic vitality," and added, "The government is also expected to undertake large-scale social overhead capital (SOC) investments."

He further noted, "Smart city construction and the expansion of projects exempt from preliminary feasibility studies are likely to emerge as promising alternatives," adding, "this year, South Korea's SOC budget is 23.2 trillion KRW, an increase of 17.6% compared to the previous year."

Researcher Choi also introduced, "The national balanced development project planned last year will be fully implemented starting this year," and "approximately 20 trillion KRW will be invested over 10 years."

Research Alom suggested focusing on undervalued small and medium-sized construction companies with low debt ratios and strong stock price momentum, such as Hanshin Engineering & Construction, Samho, Dongwon Development, and Samho Development. Based on last year's performance, the average price-to-earnings ratio (PER) is only 3.1 times, and the price-to-book ratio (PBR) is just 0.41 times.