[Click eStock] Why DL E&C's Stock Price Is Expected to Rise Despite Decreased Contract Amounts

[Asia Economy Reporter Ji Yeon-jin] Meritz Securities announced on the 30th that it maintains a buy investment opinion and a target price of 180,000 KRW for DL E&C, expecting gradual stock price increases despite low growth rates, considering the company's annual cash flow generation capability.

Park Hyung-ryeol, a researcher at Meritz Securities, stated, "As of the end of the second quarter, DL E&C's cash and cash equivalents increased by 396 billion KRW compared to the end of last year, reaching 2.2328 trillion KRW, due to the receipt of remaining payments from households moving into Seoul Acro Forest in the first half and advances received from some civil engineering project sites." He explained, "The debt ratio improved by 1.7 percentage points compared to the beginning of the year, maintaining 10%, and net cash increased by 257.9 billion KRW to 1.266 trillion KRW, maintaining a stable financial structure."

DL E&C's consolidated sales for the second quarter were 1.9223 trillion KRW, a 12.7% decrease compared to the same period last year. Operating profit was 229 billion KRW, down 19.9%, slightly exceeding market expectations. Last year, sales temporarily decreased due to sluggish new orders in the plant sector and the completion effect of large-scale housing sites.

The cost ratios were 86.7% for civil engineering, 85.7% for plants, and 80.2% for housing, all exceeding the average of large construction companies.

Researcher Park said, "While a conservative order-taking strategy slowed external growth, profitability is expected to continue to exceed the industry average as a trade-off. Considering the high proportion of the developer business with high profitability, the profitability of the housing sector is expected to improve further."

On a separate basis, DL E&C's housing sector orders in the first half amounted to 1.4945 trillion KRW, down 28.2% compared to the same period last year. However, considering the projects planned for order recognition this year, the company secured a total of 4 trillion KRW in housing orders by the end of the first half.

The order composition by sector consisted of 40% developers, 23% urban development, and 37% general contracting.

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