[Click eStock] "GS Geonseol, Reevaluation Just Beginning... Target Price Raised"

Hana Financial Investment Issues 'Buy' Rating and 48,000 KRW Target Price... Closing Price 40,000 KRW on 5th

[Asia Economy Reporter Kum Boryeong] An analysis has emerged that the revaluation of GS Construction is just beginning.

According to Hana Financial Investment on the 6th, GS Construction's fourth-quarter results last year are expected to be sales of 2.7 trillion KRW and operating profit of 208 billion KRW. Sales decreased by 5% compared to the previous year, but operating profit increased by 14%.

Yoon Seunghyun, a researcher at Hana Financial Investment, said, "The year-on-year decrease in fourth-quarter sales reflects a slowdown in sales due to a decline in plant backlog levels. The fourth-quarter operating profit is expected to increase year-on-year due to an improvement in cost ratio from the expansion of new business in 2020 and a base effect on operating profit from the payment of management performance bonuses in the fourth quarter of 2019. The annual orders for 2020 are estimated to reach 12 trillion KRW on a consolidated basis, including orders for housing redevelopment projects in Busan and Jinhae in the fourth quarter, as well as highway and urban railway orders. This slightly exceeds the company's guidance of 11.5 trillion KRW at the beginning of the year, which is positive," he explained.

This year, GS Construction's number of housing units for sale is expected to exceed 27,000 units. About 2,500 units from last year's housing sales were postponed to early this year. Researcher Yoon analyzed, "Considering the favorable housing sales market in the metropolitan area and major cities that has continued since the second half of last year and the postponed sales volume at the beginning of the year, up to 29,000 units could be sold within the year."

Hana Financial Investment gave GS Construction a 'Buy' investment opinion with a target price of 48,000 KRW. The target price was raised from the previous 42,000 KRW. The closing price on the 5th was 40,000 KRW. Researcher Yoon said, "The re-rating of the construction sector that has continued since the end of the year can be seen as a normalization process of the sector valuation, which had been excessively low. GS Construction is expected to improve its overseas business structure through the expansion of the detached housing business (Danwood) and water treatment concession business (GS Inima) in the long term, and to expand its market share in metropolitan and major city redevelopment projects through the strong brand competitiveness of 'Xi'."

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