[Click eStock] Hyundai Construction, Despite Disappointing Earnings, Strong Order Momentum Remains

[Asia Economy Reporter Minji Lee] Hanwha Investment & Securities maintained a buy rating and a target price of 60,000 KRW for Hyundai Construction on the 6th. Although the third-quarter earnings are expected to be disappointing, the focus should be on order performance.

Third-quarter sales are projected at 5 trillion KRW, and operating profit at 177 billion KRW. Sales are expected to increase by 14.4% year-on-year, but operating profit is forecasted to decline by 19.7%. The operating profit is estimated to be about 16% lower than the market expectation of 210.5 billion KRW.

Song Yurim, a researcher at Hanwha Investment & Securities, said, “Total sales will record double-digit growth due to balanced growth in housing and overseas sectors, but operating profit is expected to remain at the previous quarter’s level due to reduced profit contribution from Hyundai Engineering and domestic profitability slowdown.”

As of the end of the third quarter, the order volume has already exceeded the annual order target. Housing supply is also estimated to remain unchanged from the annual plan of 30,000 units, having surpassed 21,000 units in sales. Although housing orders have somewhat slowed in the second half, the overseas order pipeline is being replenished. Major expected projects for orders at the end of the year and early next year include Saudi Maden Phosphate, Saudi NEOM Port, Saudi Amiral, Saudi NEOM Spine Tunnel, Qatar North Field follow-up construction, and Saudi NEC-related projects.

Researcher Song Yurim evaluated, “Although it is regrettable that profitability remains weak due to decreased profit contribution from subsidiaries, Hyundai Construction’s relative attractiveness is abundant given its strengths across all construction types and the expected entry into a boom period in the overseas order market.”