[Click eStock] DL E&C, Expected Expansion in Housing Sales and Eco-friendly Facility Orders

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 210,000 KRW for DL E&C on the 5th. This is based on the expectation of a stock price increase due to rising housing sales and expansion of eco-friendly facility orders.

DL E&C's third-quarter sales are expected to be 1.986 trillion KRW, and operating profit 214 billion KRW, in line with market expectations. It is estimated that the decline in civil engineering and plant sectors due to a gap in new orders was offset by housing sales.

Housing sales, which had declined for 13 consecutive quarters compared to last year since the first quarter of 2018, are predicted to rebound from the third quarter. Kyungtae Kang, a researcher at Korea Investment & Securities, said, "The housing supply performance in the third quarter is understood to be 2,700 units, including 593 units of e-Pyeonhansesang Gangil Urban Bridge. The cumulative performance this year is over 10,400 units, achieving just over half of the target, but considering the supply plan for the fourth quarter, it is likely to be achieved."

As companies begin investing in facilities to reduce carbon emissions, DL E&C is standing out in related EPC orders. In August, DL E&C received a Letter of Intent (LOI) for the EPC of the CCU facility within the biomass facility from Daesin Power and plans to sign the main contract in the fourth quarter. This project will capture 146,000 tons of carbon annually to be used for semiconductor cleaning agents, fire extinguishers, medical supplies, and more.

In June, DL E&C signed an MOU with Hyundai Oilbank to develop eco-friendly building materials for carbon neutrality. The plan is to produce calcium carbonate through carbon capture facilities at the Daesan plant and use it as building materials. The main contract is scheduled to be signed next year to start construction.

Researcher Kyungtae Kang stated, "The domestic housing decline, which had been pointed out as a valuation discount factor, has stopped, and sales in civil engineering and plant sectors are expected to normalize from 2022 based on newly ordered projects. DL E&C, with experience in CCUS and ammonia plant EPC, is noteworthy as a major beneficiary of the eco-friendly facility investment cycle."