[Market Focus] Construction Stocks Surge, Led by Kumho Construction, on Seoul Metropolitan Housing Supply Measures

Mid-Sized Builders Surge on Strengthened Public-Led Supply Policy
Kumho Construction Shares Jump Over 10%
Government's New Housing Measures Boost Expectations for Increased Orders

Following the government's announcement of new housing supply measures for the Seoul metropolitan area, construction stocks showed strong performance in early trading on September 8. In particular, as the public-led supply policy was strengthened, shares of mid-sized construction companies such as Kumho Construction surged by more than 10%.

As of 10:12 a.m. on this day, Kumho Construction shares were trading at 4,115 won on the Korea Exchange, up 10.32% from the previous trading day. The stock opened at 3,830 won and soared to as high as 4,340 won during the session.

Other construction companies also saw sharp gains, with Dongbu Construction up 5.99%, Taeyoung Engineering & Construction up 5.72%, Hanshin Engineering & Construction up 4.50%, and Kolon Global up 3.47%.

The rally appears to reflect expectations for increased orders for construction companies after the government announced a real estate plan to supply a total of 1.35 million homes in the metropolitan area. The government plans to begin construction of 270,000 new homes annually in the region through 2030.

Additionally, the government restructured the project model so that Korea Land & Housing Corporation (LH) will no longer sell residential land to the private sector but will instead directly develop the land, with private construction companies limited to construction work only. Industry experts believe that mid-sized builders will have an advantage over large firms in winning these projects due to their price competitiveness.

Exterior view of Kumho Construction headquarters. Kumho Construction

In particular, Kumho Construction has continued to expand its public housing project orders, having been selected as the preferred bidder for multiple third-phase new town public-private partnership projects in Uiwang, Gunpo, Ansan, Wangsuk in Namyangju, Gyosan in Hanam, and Hakon in Gwangmyeong, as well as securing the urban complex development project at Yeonsinnae Station in Eunpyeong District, Seoul. These achievements are regarded as key drivers for future performance improvement.

Previously, Park Sera, a researcher at Shin Young Securities, analyzed, "Kumho Construction's cumulative orders in the first half of this year reached 847 billion won, and with the signing of main contracts for public-private partnership projects within the year, the total order amount is expected to exceed the original target of 2.7 trillion won. Operating profit is also expected to surpass the guidance of 21 billion won and reach 40.7 billion won." Kumho Construction has maintained a streak of profitability for three consecutive quarters since the fourth quarter of last year.