[Click eStock] "Daelim Construction, Undervalued Despite Long-Term Stock Price Increase... Target Price Up 5%"

[Asia Economy Reporter Ji-hwan Park] Meritz Securities maintained a 'Buy' rating on Daelim Construction on the 1st, stating that despite long-term stock price increases, the company remains undervalued, and raised the target price by 5% from 40,000 KRW to 42,000 KRW.

Researcher Hyung-ryeol Park of Meritz Securities evaluated, "Despite steady stock price growth over the past few years, Daelim Construction's net profit and cash holdings have increased at a faster pace, indicating that the company's value is still in an undervalued phase."

This year's performance is expected to reach 254.1 billion KRW in operating profit, a 25% increase compared to the previous year. Net cash holdings are projected to rise from 449.8 billion KRW last year to 606.6 billion KRW this year, accounting for more than 80% of the current market capitalization.

The volume of new housing supply, which had remained at around 4,000 to 5,000 units annually, is expected to surge to 8,956 units this year. Last year, during the merger of Samho and Goryeo Development, Daelim Construction's contract ranking significantly improved, and it has grown to a scale capable of independently pursuing large-scale development projects and urban renewal projects.

Urban renewal orders increased from 319.9 billion KRW in 2019 to 602.3 billion KRW in 2020, and building orders rose from 225.5 billion KRW in 2019 to 532.4 billion KRW in 2020. Based on an annual supply of around 4,000 units, it is possible to secure operating profit and cash flow at last year's level, and if the planned increase in supply volume proceeds as expected this year, performance growth is anticipated to accelerate after 2022.

Researcher Hyung-ryeol Park stated, "Even for small and medium-sized construction companies, the importance of housing brand competitiveness is increasing," adding, "Considering the long-term expansion of reconstruction and redevelopment projects in both the metropolitan area and provinces, performance and stock price growth are expected to continue based on the solid brand E-Pyeonhan Sesang and unique financial strength."