Hanshin Gongyeong Wins Contract for Jeongseon Imgae~Donghae Sinheung Road Construction Project

Contract Amount 137.3 Billion KRW

Hanshin Engineering & Construction announced on the 9th that it has won the contract for the "National Road No. 42 Jeongseon Imgae~Donghae Sinheung Road Construction Project."

The "National Road No. 42 Jeongseon Imgae~Donghae Sinheung Road Construction Project" involves constructing a 13.1 km road section from Imgae-ri, Imgae-myeon, Jeongseon-gun, Gangwon Province to Sinheung-dong, Donghae City, with a contract amount of 137.3 billion KRW. It is the second pilot project under the "Construction Safety Scoring System" promoted by the Ministry of Economy and Finance and the Public Procurement Service.

Hanshin Engineering & Construction stated that amid the ongoing slump in the housing sales market, it is focusing on securing orders in the public construction sector and urban redevelopment projects. Representative achievements include winning the contract for the "Gyeongbu Line Cheonan~Sojong-ri Snow Crossing Overpass Construction Project (contract amount 33.1 billion KRW)" and being selected as the contractor for the "Cheongcheon Siyeong Apartment Reconstruction and Redevelopment Project (contract amount 313.6 billion KRW)." Hanshin Engineering & Construction said, "Following last year, we aim to join the '10 trillion KRW club' in urban redevelopment project orders this year as well."

Accordingly, the contingent liability risk remains at the industry's lowest level. Hanshin Engineering & Construction's project financing (PF) guarantee balance stands at 328.6 billion KRW. The proportion of PF contingent liabilities for unstarted projects relative to equity capital was found to be 0% (according to a Korea Ratings report). The amount of completion guarantee commitments was 486.1 billion KRW (36.7% of sales), which is lower than the industry average ratio of completion guarantee commitments to sales (108.9%). In the industry, this ratio is generally considered to require management if it exceeds 100%.

A Hanshin Engineering & Construction official said, "The company has focused more on risk management than profitability in preparation for the housing market downturn. As a result, the levels of contingent liability risks such as PF contingent liabilities and completion guarantees are lower compared to other companies." He added, "This year, we expect to achieve both profitability improvement and risk management simultaneously through the progress of our own projects and contract increases reflecting cost escalations in ongoing sites."