[Click eStock] "Hyundai Construction's Housing Sales Growth Potential to Increase"

Eugene Investment "Target Price 54,000 KRW, Maintains 'Buy' Rating"
Possible Upward Revision of 2022 Earnings Estimates Depending on Sales Performance

[Asia Economy Reporter Gong Byung-sun] An analysis has been raised that Hyundai Construction's housing sales growth will increase in the second half of the year. It is expected that the performance estimate for 2022 could be revised upward depending on this year's pre-sale results.

On the 7th, Eugene Investment & Securities maintained a target price of 54,000 KRW and a 'Buy' rating for Hyundai Construction. Eugene Investment & Securities stated that last year, a bad debt provision of 63 billion KRW for accounts receivable from the Venezuela refinery project was reflected in selling and administrative expenses, and an annual total of 230 billion KRW was also reflected due to overseas cost increases caused by COVID-19.

Hyundai Construction's housing sales growth is expected to increase this year. New housing pre-sales were sluggish at 19,800 units in 2019 but increased to 27,767 units last year. The estimated housing pre-sale guidance for this year is 52,000 units consolidated and 32,000 units separate, with about 5,500 units recorded in the first quarter. Researcher Kim Yeol-mae of Eugene Investment & Securities said, "New pre-sales are concentrated in the 3rd and 4th quarters this year," and added, "Some reconstruction projects where general pre-sales are delayed are already understood to have started construction."

Accordingly, Researcher Kim expects sales and operating profit growth in the domestic housing sector this year. The domestic housing sector is known to be highly profitable. Therefore, depending on pre-sale performance, it seems possible to revise upward the performance estimates for 2022. Researcher Kim explained, "There may be COVID-19 impacts in overseas regions, but the possibility of profit damage has decreased," and "I still recommend Hyundai Construction as a second-best stock."

Hyundai Construction's sales in the first quarter of this year recorded 4.0292 trillion KRW, down 0.7% year-on-year, and operating profit rose 14.5% to 189.4 billion KRW. The decrease in sales appears to be due to sluggish housing pre-sales in 2019.