[Market Focus] GS Engineering & Construction Rises on Sale of Water Treatment Subsidiary GS Inima

GS Engineering & Construction is showing strength following news of the sale of its water treatment subsidiary, GS Inima.

As of 9:20 a.m. on August 25, GS Engineering & Construction was trading at 19,320 won on the Korea Exchange, up 250 won (1.31%) from the previous session. The stock has been on an upward trend for four consecutive days.

On August 24, GS Engineering & Construction announced that it had sold its entire stake in its water treatment subsidiary, GS Inima, to TAQA, the state-owned energy company of Abu Dhabi, United Arab Emirates (UAE). The transaction involved the sale of all shares in GS Inima, which were held through its wholly owned subsidiary, Global Water Solution, to TAQA. The deal is valued at approximately $1.2 billion (about 1.677 trillion won).

Jang Moonjun, a researcher at KB Securities, commented, "Although GS Inima has grown into an excellent global water treatment company, its operating value has not been fully reflected in GS Engineering & Construction's stock price. Considering the potential management challenges arising from the expansion into broad business areas such as Latin America and the Middle East, and the somewhat inorganic new business portfolio of GS Engineering & Construction, the sale of management rights at a good price should be viewed positively in many respects." He added, "Above all, the market's concerns about financial burdens, such as the net debt of 2.9 trillion won and a debt ratio of 253.2% as of the first half of this year, may be alleviated."