[Click eStock] "Hyundai Construction Shows Strong Performance in Both Domestic and International Sectors"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating and a target price of 70,000 KRW for Hyundai Construction on the 25th. This decision is based on the expectation that the company will continue a clear trend of performance improvement due to domestic new orders, housing sales achievements, and revenue contributions from large overseas projects.

In the third quarter, Hyundai Construction recorded sales of 4.35 trillion KRW and an operating profit of 220.4 billion KRW, representing increases of 7.7% and 57.6% respectively compared to the same period last year, meeting market expectations. Overseas sales grew by 24.9% year-on-year to 714.5 billion KRW, driven by increased revenue from the large-scale Marjan expansion project in Saudi Arabia, marking the first sales growth compared to the same period last year since the third quarter of 2019.

Researcher Kiryong Kim of Yuanta Securities said, “The operating profit improvement this quarter was further expanded due to the base effect from costs related to the UAE Mirfa power plant, Algeria, and Malaysia projects (100 billion KRW) in the third quarter of last year,” adding, “The foreign exchange gains from the won-dollar appreciation acted as a factor improving pre-tax profit and net income attributable to controlling shareholders compared to the same period last year.”

As of the third quarter cumulative basis this year, new orders (consolidated basis) reached 23.6 trillion KRW, corresponding to 93% of the annual forecast (126% domestic, 51% overseas), exceeding expectations in the domestic sector. The tangible results from the fourth quarter projects in Saudi Jafurah (1.3 billion USD), Philippine railway (1.2 billion USD), and Qatar hospital (300 million USD)

are expected to further expand the scale of order overachievement this year. Despite delays in the planned sales of redevelopment projects in Seoul and the metropolitan area within the year, housing sales performance has reached 21,372 units cumulatively in the third quarter, laying the foundation for improved housing and construction performance through expanded sales. Housing sales are estimated at 19,825 units last year (separate basis), 21,372 units in the third quarter this year, and an expected 31,938 units this year.

Researcher Kim said, “Along with stable core business growth, the results of renewable and low-carbon energy projects such as offshore wind power and small modular nuclear reactors are also expected to gradually materialize,” adding, “The realization of the Egypt EI Dabba nuclear power plant order is expected to contribute to securing overseas growth potential based on the company’s diversification of construction types.”

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