Beneficiary Stocks of Housing Supply Expansion Policy...Will Construction and Building Materials Stocks Smile Brightly?

[Asia Economy Reporter Ji Yeon-jin] Due to the government's policy to expand housing supply, construction companies and construction material-related sectors are expected to benefit. Various government housing supply measures, including the 3rd New Town, are being fully implemented, and redevelopment and reconstruction projects, which had been virtually halted due to various regulations, are showing signs of resuming. The housing remodeling market is also expected to grow as people continue to stay home due to COVID-19.

According to the securities industry on the 14th, domestic construction orders last year amounted to 194 trillion won, a 17% increase compared to the previous year. Civil engineering was limited to 45 trillion won, down 10% from the previous year, but residential construction increased by 42% to 93 trillion won. Non-residential construction rose 11% to 57 trillion won.

The construction market generates sales at the time of groundbreaking and sales after orders are received, and since this continues until groundbreaking, the increase in housing orders last year is expected to expand the scale of construction companies and construction material sectors from this year through 2023. In particular, large construction companies with strong competitiveness in the housing sector are expected to expand their market share and record growth rates exceeding the overall market growth rate.

Yoon Seung-hyun, an analyst at Hana Financial Group, said, "Domestic construction orders this year are expected to see a slight decrease in residential construction, but non-residential construction will increase by 3-5%, and civil engineering will grow by 10% due to an increase in social overhead capital (SOC)." He added, "Construction orders are expected to remain around 200 trillion won, maintaining a higher level than before, so benefits are expected across the industry due to increased construction investment."

Lee Min-jae, an analyst at NH Investment & Securities, predicted, "Housing groundbreaking this year is estimated at 600,000 units, which is lower compared to 880,000 units in 2015, but sectors such as cement (Ssangyong Cement, Sampyo Cement, Asia Cement) and remodeling (Hanssem), which are undergoing structural reform and performance improvement simultaneously, will benefit."

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