[Click eStock] "GS Geonseol, Strong Performance Expected to Continue This Year"

[Asia Economy Reporter Park Jihwan] Yuanta Securities maintained a 'Buy' rating and a target price of 57,000 KRW for GS Construction on the 12th, stating that the strong performance in the housing and construction sectors will continue to drive earnings growth this year.

Kim Giryong, a researcher at Yuanta Securities, said, "In addition to the Precast Concrete business (GPC) and overseas modular business currently reflected in the earnings, various new construction and environmental businesses such as the secondary battery recycling business (Enerma) scheduled for completion in 2023 and the Vietnam development project are expected to gradually materialize. The consolidation effect of S&I Construction in February this year is also expected to be a positive factor for earnings improvement through securing LG Group's volume," he said.

Last year's consolidated earnings for the fourth quarter recorded sales of 2.56 trillion KRW and operating profit of 205.2 billion KRW. While sales are expected to decrease by 9.1% year-on-year, operating profit is expected to increase by 0.2%. In terms of sales, the trend is expected to continue where the decline in plant sales throughout the year is offset by the housing and construction sectors.

Last year's domestic housing pre-sales are estimated to be about 27,000 units, similar to the previous year, continuing earnings growth centered on housing and construction. Considering the 5,000 units delayed from the approximately 32,000 units pre-sale guidance last year to this year, it is expected that pre-sales performance will exceed 30,000 units this year. While the sharp decline in plant sales due to a decrease in large plant orders and workforce adjustments is a burden, the earnings base in the non-residential sector is expanding.

Researcher Kim Giryong emphasized, "In the overseas new market, the Australian infrastructure sector is expected to expand the earnings base in the non-residential sector through the order pipeline centered on NEL (2.8 trillion KRW) secured in the second half of last year, as well as the 2022 Australian Inland Rail (1 trillion KRW), the remaining Oman seawater desalination project (1.4 trillion KRW), and the Singapore railway (about 1 trillion KRW)."