[Asia Economy Reporter Hyungsoo Park] Research Alom analyzed on the 10th that the government is highly likely to invest in social overhead capital (SOC) to overcome the economic recession caused by the novel coronavirus disease (COVID-19) crisis, and Samho Development could become a beneficiary.
Researcher Seonghwan Choi of Research Alom said, "As concerns about economic recession due to the COVID-19 aftermath are becoming a reality, the government focused on the Four Major Rivers Project during the 2008 financial crisis," and predicted, "The government will once again undertake large-scale SOC investment."
He explained, "Due to the reduction of SOC budgets over the past two years, bidding competition intensified, causing Samho Development's operating profit margin to decline," and "This year, the government's total SOC budget is 23.2 trillion won, an increase of 17.6% compared to last year."
Furthermore, "If large-scale SOC investment proceeds, Samho Development's profitability will also improve," emphasizing, "97% of Samho Development's sales proportion comes from civil engineering projects."
Researcher Choi added, "Construction performance is also concentrated on SOC projects such as roads, ports, and bridges," and "They operate their own aggregate production plant, providing cost competitiveness, and their debt ratio is 56%, which is superior compared to the industry average of 163%."
He also analyzed, "The price-to-book ratio (PBR) is 0.51 times, and the net financial assets held amount to 155.1 billion won, which is about 53.7 billion won more than the market capitalization of 101.4 billion won."
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