[Click eStock] "Hyundai Construction Q1 Earnings Expected to Meet Forecast... Target Price Maintained"

NH Investment & Securities maintained a buy rating and a target price of 42,000 KRW for Hyundai Engineering & Construction on the 22nd, stating that "despite cost burdens in the housing sector, solid sales are expected to push the first-quarter earnings this year to exceed market expectations by more than 20%." The previous trading day's closing price was 33,250 KRW.

On the same day, Minjae Lee, a researcher at NH Investment & Securities, said, "The risk in the housing sector remains high due to the low likelihood of a recovery in the domestic real estate market," but added, "This is being offset by the expansion of affiliated factories in North America and projects in the Middle East and Eastern Europe. New nuclear power plant projects are expected to gradually expand to countries such as Korea, Bulgaria, and Romania."

Regarding the reason for maintaining the target price, he explained, "Although the 12-month moving average EBITDA was raised by 8%, the reduced net cash was reflected," and noted, "The cost ratio in the housing sector on a separate basis is expected to record 93% as previously estimated this year, with the improvement point projected for next year."

He also analyzed, "However, the housing sector cost ratio next year is expected to be only 91%, which is higher than in the past," adding, "Although the cost ratio at major sites has recovered since last year, it remains at a higher level than before, and the sales proportion is also small."

The researcher explained, "On a consolidated basis, first-quarter sales are expected to reach 8.5 trillion KRW, a 42% increase compared to the same period last year, and operating profit is expected to increase by 45% to 250.9 billion KRW. This exceeds market expectations by more than 20%," attributing this to "a significant increase in sales in the housing sector on a separate basis and improvements in domestic and overseas cost ratios."

He added, "The housing sector cost ratios for Hyundai Engineering & Construction on a separate basis and Hyundai Engineering are expected to be 93% and 95%, respectively. For reference, since the housing sector cost ratio has worsened for more than two years, the sales proportion of those sites is expected to gradually decrease."