Hyundai Engineering & Construction Sees Overseas Sales Rebound... Increased Possibility of Earnings Turnaround

Housing Sector Continues Strong Performance... Nearly 70% of Housing Supply Target Already Achieved

[Asia Economy Reporter Gong Byung-sun] There is a view that Hyundai Engineering & Construction's third-quarter performance this year will meet market expectations (consensus) along with a rebound in overseas sales. Among major construction companies, it is also maintaining the most favorable housing supply.

On the 2nd, KB Securities estimated Hyundai Engineering & Construction's third-quarter sales this year at 4.54 trillion KRW, a 12.4% increase compared to the same period last year, and operating profit at 225.3 billion KRW, a 61.1% increase over the same period. This slightly underperforms the consensus of 4.6241 trillion KRW in sales and 230.2 billion KRW in operating profit by 1.82% and 2.13%, respectively.

The rebound in overseas sales has been delayed, and the turnaround in performance is expected to be postponed due to one-off costs in the second quarter. However, KB Securities expects that from the third quarter, the rebound in overseas sales will be reflected in the performance. The Saudi Arabia Jafra project, for which commercial bidding has been completed, is valued at 3 billion USD (3.561 trillion KRW), the Philippines commuter railway at 1.5 billion USD, and the Peru airport at about 500 million USD.

Researcher Jang Moon-jun of KB Securities said, "Considering the project pipeline, achieving the annual overseas order target of 6 trillion KRW should be smooth," and added, "For the first time since the third quarter of 2019, overseas sales on a separate basis will rebound compared to both the same period last year and the previous quarter."

The favorable housing supply is also continuing. Hyundai Engineering & Construction's housing supply target for this year is 31,938 units, of which about 22,000 units have already been supplied cumulatively in the third quarter. This is close to a 70% achievement rate. Considering that the 3,731-unit Hillstate Monteroi project is scheduled for sale in October, the supply target for this year is expected to be achievable.

Housing supply is also expected to be favorable next year. Researcher Jang said, "Orders in the housing sector, which can be considered a leading indicator of individual companies' housing supply, are also showing favorable trends," and explained, "It is impressive that stable business opportunities are being sought through land acquisition such as the apartment site in Gayang-dong, Gangseo-gu, and the Le Meridien Hotel site in Gangnam."

Accordingly, KB Securities maintained its investment opinion of "Buy" and target price of 66,000 KRW for Hyundai Engineering & Construction. The closing price on the 1st was 50,300 KRW. Researcher Jang said, "Both housing supply and orders are favorable," and "We maintain our opinion of it being the second-best stock in the industry."

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