[Click eStock] "HDC Expected to Deliver Strong Earnings Growth... Target Price Raised"

On June 5, Hanwha Investment & Securities raised its target price for HDC from 27,000 won to 30,000 won, projecting strong earnings growth for the company over the next two to three years.

In the first quarter, HDC posted revenue of 1.57 trillion won and operating profit of 154.8 billion won, up 14.2% and 104.8%, respectively, compared to the same period last year. These figures exceeded previous operating profit estimates by 19.1%. The contribution from Tongyeong Eco Power was particularly notable.

Song Yurim, an analyst at Hanwha Investment & Securities, forecasted robust earnings growth for HDC over the next two to three years. Song stated, "This year, Tongyeong Eco Power is driving earnings, and from next year, we expect HDC Hyundai Development Company to see substantial profit growth." Song also added, "In the medium to long term, we anticipate a steady increase in the value of HDC's equity holdings."

Song went on to say, "Due to the continued rise in the stock price, the current dividend yield based on last year's DPS has dropped to the 1% range. However, as standalone earnings improve, we expect a gradual increase in DPS. In this context, we anticipate that an announcement on shareholder return policy around the end of the year will provide greater visibility on dividend expansion."

Hanwha Investment & Securities maintained a "Buy" rating on HDC and set its target price at 30,000 won.

Song explained, "We raised our target price to reflect the increase in the value of subsidiaries' equity holdings driven by strong results from Tongyeong Eco Power and the rising share price of HDC Hyundai Development Company, as well as the increase in standalone net cash at the end of the first quarter." Song added, "Despite the steady rise in the stock price since last year, valuation pressure remains low when considering the strong earnings growth expected to continue over the next two to three years."