[Click eStock] “Hyundai Construction, Surprise Expected in the Second Half”

Ebest Investment "Hyundai Construction Target Price Raised from 65,000 KRW to 74,000 KRW"
Q2 Earnings Below Consensus... Potential Overseas Earnings Expected from Second Half

[Asia Economy Reporter Gong Byung-sun] Hyundai Engineering & Construction is expected to post below-expectation results for the second quarter of this year. However, considering overseas performance, there is also analysis suggesting a potential surprise in the second half of the year.

On the 1st, Ebest Investment & Securities forecasted Hyundai Engineering & Construction's second-quarter sales to decrease by 2.2% year-on-year to 4.4434 trillion KRW, while operating profit is expected to increase by 42.3% to 219 billion KRW. However, both figures fall short of market consensus estimates. Sales are expected to be 3.1% below consensus, and operating profit 2.7% below.

The delay in reflecting overseas site sales due to COVID-19 appears to have caused the performance to fall short of expectations. Researcher Kim Se-ryeon of Ebest Investment & Securities explained, "Last year, due to COVID-19, a high level of order backlog did not convert into sales, resulting in sluggish external growth," adding, "An overall slowdown in growth was inevitable."

However, potential overseas performance is expected to be recognized starting in the second half of the year. Recently, the Export-Import Bank announced support of about 800 billion KRW for the Panama Metro project Hyundai Engineering & Construction won last year, through export receivables purchase, and a full-scale overseas sales turnaround is expected from the third quarter. In addition, overseas site progress is set to accelerate with projects such as the Saudi Majan oil processing facility worth 1.7 trillion KRW, gas processing facility worth 1.4 trillion KRW, and Qatar Lusail Plaza Tower worth 1.2 trillion KRW.

Accordingly, Ebest Investment & Securities maintained a 'Buy' rating on Hyundai Engineering & Construction. The target price was raised from 65,000 KRW to 74,000 KRW. The closing price on the previous day was 58,300 KRW. Researcher Kim said, "Since overseas segment performance is expected to improve in the second half, it has differentiated investment points compared to other construction companies," and recommended it as a top pick within the large construction sector.

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