[Click eStock] "GS Geonseol Cost Ratio Improvement Slows Down"

Sangsangin Securities maintained a 'Buy' investment rating and a target price of 22,000 KRW for GS Construction on the 1st, citing a slowdown in the pace of cost ratio improvement.

Researcher Lee Eun-sang of Sangsangin Securities stated, "In the first half of the year, cost ratio improvement in the housing sector was notable due to temporary contract increases and completion settlement negotiations, but this was not confirmed in the third quarter."

GS Construction's third-quarter sales amounted to 3.1 trillion KRW, similar to the previous year, while operating profit increased by 36% to 81.8 billion KRW. In the plant sector, sales began to occur in earnest from the Padihilli Gas Project (1.7 trillion KRW), resulting in a 51% increase in sales to 102.4 billion KRW. Sales from this site are expected to accelerate after next year.

In the construction sector, there were some equity sales at housing development projects such as rental housing in Dongtan. This was reflected in the construction sector's cost ratio, and part of it was recorded as investment gains from housing development projects (127.7 billion KRW) under non-operating income.

The researcher evaluated, "The differentiation from other companies in terms of the pace of cost ratio improvement has weakened."

Regarding GS Inima, uncertainty remains as the sale decision and scope have not been finalized. Considering the lowered brand image, the competitiveness in securing maintenance projects is judged to be relatively lower compared to other companies. However, the researcher analyzed, "Nonetheless, since the housing sales proportion is high, GS Construction is still expected to benefit the most from the recovery of the domestic housing market."