[Click eStock] "Hyundai Construction, Profitability Improvement Expected in Second Half"

Daishin Securities expected Hyundai Construction's financial profitability to improve in the second half of this year on the 17th. They maintained a 'Buy' investment rating and a target price of 54,000 KRW.

Researcher Lee Taehwan of Daishin Securities forecasted Hyundai Construction's Q1 sales this year to reach 8.3 trillion KRW, a 37% increase compared to the same period last year, and operating profit to be 197.2 billion KRW, a 13.6% increase for the same period. The operating profit is in line with market expectations.

Lee said, "While construction and housing sales remain steady, it is understood that the quarterly sales of the subsidiary Hyundai Engineering have risen to nearly 4 trillion KRW. However, despite the growth in scale, there are still difficulties in improving the cost ratio, making it hard to expect profit growth beyond the increase in sales."

According to Lee, the stagnation in profitability improvement efforts acts as an obstacle to increasing corporate value. He analyzed, "Considering the abundant overseas order pipeline covering various types of projects such as Saudi NEC and the Bulgarian nuclear power plant, it is difficult to doubt their competitiveness in securing orders. In the second half of the year, the CJ Gayang-dong development project, a quasi-in-house project with high profitability, is scheduled to begin construction, which could improve overall profitability." He added, "It is also possible to reduce the scale of unstarted project financing (PF)."