Shinhan Investment Corp. "Construction Sector Continues Poor Performance Due to Raw Material Costs"

Sharp Decline in New Construction Starts Leads to Increased Sales Drop
Seohui Construction and Hanshin Engineering Show Strong Performance

Shinhan Investment Corp. analyzed on the 21st that "the decline in new housing starts (sales) since 2023 has led to an expanded drop in sales for small and medium-sized construction companies."

Researcher Kim Sun-mi of Shinhan Investment Corp. stated, "Housing indicators have weakened, and due to interest rate volatility, the stock prices of construction and building materials companies are sluggish."

Researcher Kim explained, "Despite favorable conditions such as the decline in international oil prices and the seasonal peak period, considering the reduction in B2B sales due to a decrease in move-in volumes, the potential for performance improvement in the fourth quarter is expected to be low," adding, "It is necessary to selectively focus on companies (Hanssem, KCC, Hanshin Engineering & Construction) that are improving profitability by focusing on high-margin products."

He diagnosed, "Seohui Construction and Hanshin Engineering & Construction showed good performance, which is understood to be due to the expansion of regional housing association sales and the effect of sales from self-developed project deliveries, respectively," and added, "It is unreasonable to interpret this as a recovery signal for the entire industry."

He continued, "Seohui Construction is expected to experience a performance slowdown due to a reduction in regional housing association sales after the fourth quarter, but the sales effect from Hanshin Engineering & Construction's self-developed project deliveries will continue."