[Click eStock] Temporary Pause for Safe Leader 'Hyundai Geonseol'... Target Price Down, Buy Maintained

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 25th that it has lowered the target price of Hyundai Construction by 9.3% to 68,000 KRW. However, the buy rating was maintained.

The target price was calculated by applying a target price-to-book ratio (PBR) of 1.0x to the 2022 book value per share (BPS) of 68,651 KRW. The target PBR reflects a 10% discount applied to the five-year average PBR of major domestic construction companies from 2010 to 2014.

Lee Dong-heon, a researcher at Daishin Securities, stated, "During sharp rises related to raw material price increases, cost adjustment contracts and supply chain issues show that the leading stocks are relatively stable," adding, "The delay in the Dunchon Jugong project has no legal defects, and the outstanding receivables of 300 billion KRW are recoverable." He further explained, "Policy expectations remain intact, and there is anticipation for ultra-high-quality domestic housing and overseas orders due to rising oil prices," maintaining the buy opinion.

First-quarter results this year showed sales of 4.1453 trillion KRW (-0%) and operating profit of 171.5 billion KRW (-15%), which are about 7% and 11% below consensus for sales and operating profit, respectively.

Sales were temporarily affected by the completion and closing of large-scale sites. Operating profit was temporarily stagnant due to delays in settlement of domestic civil engineering and plant completions.