[Featured Stock] GS Geonseol Faces Credit Risk Amid Reconstruction Decision... 52-Week Low

GS Construction, which decided to fully reconstruct the Geomdan apartment complex, has hit a 52-week low.

At 9:55 a.m. on the 7th, GS Construction was trading at 14,070 KRW, down 3.1% from the previous trading day. The company's stock price fell to as low as 14,060 KRW during the session, marking a 52-week low. The previous day, GS Construction's stock price had plunged by more than 19%.

The decision by GS Construction to fully reconstruct the Geomdan apartment complex has weighed on the stock price for two consecutive trading days. After it was confirmed that the cause of the collapse accident was a comprehensive failure at all stages including design, supervision, and construction, GS Construction issued an apology and announced that it would fully reconstruct the entire Geomdan complex and provide all compensation for delays in move-in.

Securities experts are downgrading their investment opinions on GS Construction to neutral and lowering target prices. Kyungtae Kang, a researcher at Korea Investment & Securities, said, "Additional delay penalties due to the extended demolition period, compensation payments such as interest costs to LH, which is responsible for financing the existing project, and losses from decreased order performance due to brand awareness decline will continue to arise," and downgraded the investment opinion to neutral without suggesting a target price.

Credit rating agencies are also expressing concerns about a decline in creditworthiness. Jihoon Jeon, a research fellow at Korea Ratings, stated, "In addition to cost burdens, negative perceptions regarding brand awareness and construction capabilities are spreading, and if new orders are disrupted, it could act as a major factor in the overall deterioration of the business foundation. Depending on the conditions for issuing asset-backed securities and corporate bonds, there is also a risk of significant changes in cash flow and financial structure, so we plan to verify refinancing and reflect it in the credit rating."