[Market Focus] Hyundai Engineering & Construction Drops Over 6% on Growing Earnings Uncertainty

Hyundai Engineering & Construction's stock price is declining amid expectations of increased earnings uncertainty.

As of 9:36 a.m. on October 17, Hyundai Engineering & Construction was trading at 57,400 won, down 3,800 won (6.21%) from the previous trading day.

On this day, Meritz Securities maintained its buy rating on Hyundai Engineering & Construction but lowered its target price by 18% to 76,000 won, citing growing uncertainty in the company's earnings outlook.

Moon Kyungwon, a researcher at Meritz Securities, stated, "Operating profit for the third quarter of this year is expected to be 45.8 billion won, falling short of the market consensus of 203.4 billion won." He explained, "Hyundai Engineering was asked to provide a bond call (performance guarantee claim) worth 170 billion won at a petrochemical plant site in Poland, which led to an increase in selling and administrative expenses. In addition, following the fourth quarter of last year, there were additional costs recognized due to project delays at plant sites in the Middle East."

He added, "Fourth-quarter results this year are also likely to fall short of expectations. Costs related to a bond call (worth several tens of billions of won) requested by a power plant site in Malaysia are expected to be reflected. There is also a possibility that additional costs may be recognized at other overseas construction sites currently underway."