[Click eStock] "Dongbu Construction Expected to Benefit from Full-Scale Airport Investment"

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment forecasted on the 14th that Kumho Construction will be the construction company that benefits the most once airport investments, including the new airport construction next year, are in full swing.

Kumho Construction completed Muan Airport as a turnkey project in 2007 and also won the consortium bid for the new Heuksan Airport in 2017. According to the 6th Comprehensive Airport Development Plan announced by the Ministry of Land, Infrastructure and Transport last month, a total of 9.4 trillion KRW will be invested by 2025, including 4.6 trillion KRW for new airport construction and 4.7 trillion KRW for existing facilities.

Kumho Construction sold 2,600 housing units in 2018, 5,256 units in 2019, and 4,170 units in 2020. Performance improvement through an increase in construction sites is expected to continue in the second half of the year. The estimated sales for the third quarter are 559.9 billion KRW, a 14% increase, and operating profit is expected to rise 57% to 37.3 billion KRW.

The total sales plan for this year is 6,946 units. The number of self-developed project sites will also increase significantly from 5 sites (433 units) in the previous year to 8 sites (2,886 units) in 2021. As of the first half of the year, 1,416 units of self-developed projects have already been sold. It is expected that performance improvement through the expansion of total sales and the proportion of self-developed projects will be strong for the coming years. In particular, during the past court management period (2010?2015), Kumho Construction focused on public housing orders, resulting in many achievements related to LH, and has extensive experience in urban development projects, which is evaluated as a strength in winning design competition-type orders with high profitability in public housing.

Kim Hyun-wook, a researcher at Shinhan Financial Investment, said, "With the government's housing supply policy, an increase in public housing orders is expected, and expansion of orders is anticipated."

"Currently, the stock price is not excessively cheap among domestic mid-sized construction companies, but the current stock price can be explained solely by improvements in housing and architecture sector performance. If public housing orders increase and airport investments are fully underway, a corresponding re-rating can be expected," he added.