[Click eStock] "Hyundai Construction, This Year Will Be the First Year of Earnings Rebound"

[Asia Economy Reporter Eunmo Koo] This year is expected to be the first year of performance rebound for Hyundai Engineering & Construction.

Last year, Hyundai Engineering & Construction's housing pre-sales were approximately 19,000 units on a separate basis (Hyundai Engineering estimated about 7,000 to 8,000 units), representing an increase of more than 50% compared to 12,000 units in 2019. On the 12th, Seunghyun Yoon, a researcher at Hana Financial Investment, stated in a report, “Based on the favorable profitability of the domestic housing business, significant performance improvement is expected to begin in the second half of this year,” and added, “This year, pre-sales of at least 20,000 units on a separate basis are also expected, indicating that the housing business division’s performance growth will continue from a long-term perspective.”

Last year, the spread of COVID-19 led to delays in converting overseas backlog into sales for general construction companies. Hyundai Engineering & Construction, which has a relatively high proportion of overseas backlog in total orders (about 36% as of the end of Q3 last year), was more negatively impacted in terms of performance by COVID-19. Researcher Yoon explained, “Although it is still too early to declare the end of COVID-19, the recent slowdown in the spread of COVID-19 in major order regions such as Saudi Arabia, Iraq, and Qatar, along with a moderate rebound in international oil prices, are reasons why the visibility of performance improvement in Hyundai Engineering & Construction’s overseas division is increasing this year.”

The investment opinion was maintained as ‘Buy,’ and the target stock price was raised by 24% from the previous 42,000 KRW to 52,000 KRW. Researcher Yoon forecasted, “Following the year-end, the partial resolution of the average multiple discount rate of large construction stocks compared to the KOSPI led to an upward adjustment of the target price-to-book ratio (PBR) to around 0.8 times,” and added, “The expectation of large project orders such as the Qatar liquefied natural gas (LNG) project in the first quarter will also act as a momentum for stock price increases for the time being.”

This content was produced with the assistance of AI translation services.