[Click eStock] "Hyundai Construction to Achieve New Overseas Project Orders in Second Half"

Korea Investment "Hyundai Construction, Target Price Raised from 62,000 KRW to 67,000 KRW"
Possibility of Additional Project Orders from Major Middle Eastern Oil-Producing Countries

[Asia Economy Reporter Gong Byung-sun] Compared to the outstanding performance in the housing sector, Hyundai Engineering & Construction is expected to show results in the second quarter of this year that remain at the market consensus level due to sluggishness in the plant and civil engineering sectors. However, if it succeeds in securing new overseas projects concentrated in the second half of the year, the stock price is expected to rise.

On the 9th, Korea Investment & Securities estimated Hyundai Engineering & Construction's second-quarter sales this year to be 4.5515 trillion KRW, a 0.2% increase compared to the same period last year, and operating profit to increase by 43.2% to 220.4 billion KRW. This is in line with the consensus.

The housing sector is expected to deliver excellent results in the second quarter as well, following the first quarter. Domestic housing sales in the second quarter are expected to increase by 21.4% compared to the same period last year. As a result, the housing supply performance in the first half of the year reached a total of 13,000 units, achieving 40% of the annual supply target and surpassing half of last year's housing supply performance of 19,825 units.

However, due to sluggishness in the plant and civil engineering sectors, overall performance is expected to only meet the consensus. Looking at the composition of new orders in the first half, except for the Vietnam Quang Trach 1 power plant, most were in the construction and housing sectors. The Panama Metro Line 3 project and the Iraq Basra refinery upgrading facility project, which were ordered last year, also showed sluggishness. Kang Kyung-tae, a researcher at Korea Investment & Securities, analyzed, "Due to sluggish sales from large overseas projects, total sales in the second quarter will remain at the usual level."

However, from the second half of the year, opportunities for bidding on new overseas projects are lined up. Large-scale project order opportunities such as the $1 billion (approximately 1.1495 trillion KRW) Zafra Gas Field Package 3, Peru Chinchero Airport main construction, Egypt El Dabaa Nuclear Power Plant, and Kuwait Shuwaibah Port are concentrated in the second half. Researcher Kang observed, "With oil prices recovering, major oil-producing countries in the Middle East that have achieved fiscal balance are also likely to issue additional projects."

Accordingly, Korea Investment & Securities maintained its investment opinion of "Buy" for Hyundai Engineering & Construction. The target stock price was raised from the previous 62,000 KRW to 67,000 KRW. The closing price on the previous day was 57,700 KRW. Researcher Kang explained, "Once cost input for large sites begins in earnest from the second half, sales in the plant and civil engineering sectors, which were sluggish in the first half, will increase," adding, "The contribution of overseas construction operating profit will also increase during the sales recovery phase."

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