[Click eStock] "PF Restructuring Intensifies... Construction Sector Investment Ratings Downgraded"

Korea Investment & Securities announced on the 15th that it is lowering its investment rating to neutral for the construction sector, stating that the restructuring of project financing (PF) related to construction companies will begin in earnest.

Kyungtae Kang, a researcher at Korea Investment & Securities, explained, "With Taeyoung Construction initiating a workout, the restructuring of PF sites related to construction companies will start in earnest," adding, "We plan to maintain a neutral sector opinion until the PF site restructuring is completed and the private housing construction cycle returns."

Korea Investment & Securities expects the combined operating profit of covered construction companies (excluding Samsung Engineering) for the fourth quarter of last year to be 609.4 billion KRW, in line with consensus. Researcher Kang analyzed, "Although there is a high possibility of overseas site accounts receivable write-offs being reflected in the fourth quarter, even considering this, operating profit is unlikely to fall significantly short of consensus."

DL E&C was presented as the top preferred stock in the sector, with a target price raised by 31.3%. This is because DL E&C is the only construction company that can avoid the current PF site restructuring. Researcher Kang said, "DL E&C, which advanced based on financial soundness during the first restructuring of the construction industry, is expected to expand its market share by avoiding this PF site restructuring."