[Click eStock] Stable Profits Across All Divisions and New Business Initiatives... Bright Outlook for DL E&C

Stable Growth in the Housing Sector... Active Promotion of Eco-Friendly New Businesses

DL E&C ePyeonhansesang Gangil Urban Bridge_Perspective View (Provided by DL E&C)

[Asia Economy Reporter Minwoo Lee] An analysis suggests that DL E&C continues to be undervalued even after its spin-off re-listing. With all business divisions generating stable profits, it is expected that the corporate value can be re-evaluated through expansion of redevelopment and reconstruction projects as well as promotion of eco-friendly new businesses.

On the 30th, KB Securities newly issued a 'Buy' investment opinion and a target price of 188,000 KRW for DL E&C based on these factors. The closing price the previous day was 133,000 KRW.

Since its spin-off re-listing on January 25, DL E&C has been trading around a 12-month forward price-to-book ratio (PBR) of 0.6. KB Securities analyst Moonjun Jang stated, "The valuation discount that Daelim Industrial had long received due to its conservative management stance and passive shareholder return policy has continued to the newly established company after the spin-off," and emphasized, "We believe that this discount is finally entering a phase where it can be resolved."

The reasons for the resolution of the valuation discount include ▲a stabilized profit base across all business divisions ▲15% of controlling shareholder net profit planned for shareholder returns over the next three years (10% dividends and 5% treasury stock acquisition) ▲annual investment of 200 billion KRW in developer-type housing projects for the next three years ▲annual investment of 100 billion KRW over the next three years to expand redevelopment and reconstruction projects. It is believed that mid- to long-term expansion centered on the housing sector and additional profit margin improvements are sufficiently possible.

Analyst Jang explained, "DL E&C plans to supply about 20,000 housing units (separate, based on construction start) this year, which may seem weak compared to other large companies in terms of volume," but added, "However, if the developer-type business, which allows sharing of additional development margins based on total project costs rather than construction costs, expands smoothly as planned, the housing division’s profit margin could further increase."

He also gave a positive outlook on the growth of the plant division. Analyst Jang said, "Utilizing the engineering capabilities and track record of the plant division, the company has expressed strong willingness to actively expand eco-friendly new businesses required by the times, such as carbon capture and storage (CCS) and ammonia plants, so there is no longer any basis to justify excessive discounts."

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