[Click eStock] "SK D&D, Developer Value Reassessment... Target Price Up 23.7%"

DB Financial Investment Report

[Asia Economy Reporter Minji Lee] DB Financial Investment on the 19th issued a buy rating for SK D&D and raised the target price by 23.7% from the previous to 47,000 KRW.

SK D&D's second-quarter earnings recorded sales of 185.7 billion KRW and operating profit of 42.9 billion KRW, increasing by 128% and 545% respectively compared to the same period last year. The recognition of revenue based on delivery started for Seongsu SK V1 Center and Sangsu W Center, where move-ins began in May, causing a sharp increase in sales and profits compared to last year.

Yoonho Cho, a researcher at DB Financial Investment, said, "The balance of the two business sites as of the second quarter is 210 billion KRW, most of which is expected to be recognized as sales in the third quarter," adding, "It is safe to say that good performance is guaranteed until the third quarter."

SK D&D's earnings volatility is expected to be high this year because a sharp decline in sales and profits is anticipated in the fourth quarter. However, this is only an accounting issue where revenue is recognized based on delivery or confirmed sale, and the business stability is judged to be very high.

Researcher Cho explained, "There are five real estate development sites that generated sales in the second quarter, but there are actually eight sites where construction is underway," adding, "The remaining three projects will be recognized as sales when pre-sale is confirmed."

He continued, "It is judged that the value of developers, which had been neglected, is beginning to be recognized," and forecasted, "Although the wind power and fuel cell pipeline increases every quarter do not have a significant immediate impact on earnings, they will increase operating income in the mid to long term."

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