[Click eStock] "Hyundai Construction, Strong Q1 Performance... Large-scale Overseas Orders Expected"

Meritz Securities Report

Meritz Securities forecasted on the 10th that Hyundai Construction will record solid results in the first quarter. They stated that future growth is expected due to numerous overseas orders anticipated in the second half of the year. Accordingly, the investment opinion was set to 'Buy' with a target price of 50,000 KRW.

Moon Kyung-won, a researcher at Meritz Securities, said, "The consolidated operating profit for the first quarter is expected to be 165.1 billion KRW, a 3.7% decrease compared to the same period last year, which aligns with the consensus of 158.4 billion KRW," adding, "There are no particular issues amid difficulties in improving the housing cost ratio." However, he added, "The progress of the Hyundai Motor plant in the U.S. and whether Hyundai Engineering's margin will increase accordingly could be variables."

Researcher Moon emphasized, "We assumed that Hyundai Engineering's gross profit margin (GPM) will decrease by 0.7 percentage points compared to the previous quarter, remaining at a similar level as the previous quarter," and "Housing pre-sales in the first quarter of this year are expected to be 800 units, which is weaker than expected, but considering that a significant portion of the postponed pre-sale volume is urban redevelopment projects, it is not time to lower expectations for the annual target of 20,800 units."

In particular, from the second quarter, the possibility of orders from Saudi Satof Amiral is very high, and orders are expected for Qatar South Package (2.5 trillion KRW), Neom Spine Box (1.4 trillion KRW), etc. Additionally, considering the pipeline bids scheduled for Jafurah 2 Gas Field, Saudi Safaniya, United Arab Emirates (UAE) Khuzaiah, and Saudi Fadhili, Researcher Moon's analysis suggests that the annual separate overseas order target of 5.7 trillion KRW is likely to be exceeded.

Researcher Moon predicted, "Diplomatic events such as the Korea-U.S. summit on April 26 and President Yoon's visit to Saudi Arabia in mid-May (not yet confirmed) could raise expectations for Hyundai Construction's nuclear power and Neom projects," and added, "These will act as short-term stock price triggers along with orders."