[Click eStock] HDC Hyundai Development Company Confirms Sales Bottom, 'Expecting Sales Performance'

[Asia Economy Reporter Lee Seon-ae] Shin Young Securities announced on the 29th that it maintains a buy rating and a target price of 36,000 KRW for HDC Hyundai Development Company. Although operating profit fell short of estimates due to one-time costs, resulting in disappointing earnings, the significance lies in confirming the bottom of sales.

Researcher Park Sera of Shin Young Securities explained, "It is positive as competitiveness is expected to be highlighted due to increased subcontracted housing sales from rising construction order backlogs, in-house project sales, and expansion of development REITs business."

HDC Hyundai Development Company's Q3 sales and operating profit recorded 859.4 billion KRW and 66.4 billion KRW, up 5.8% and down 49.9% year-on-year, respectively. Sales exceeded the company's estimate (850 billion KRW), but operating profit fell short by 52%. This was due to a new provision of 23.4 billion KRW related to defect lawsuits at in-house and construction sites.

Attention should be paid to sales growth driven by HDC Hyundai Development Company's pre-sale performance. As of October, 7,794 units have been supplied, and 6,450 units are planned for sale in November and December each, making it likely to reach 14,244 units sold within the year. In Q3, subcontracted sales recorded 523 billion KRW, a 1.1% decline from the same period last year, but the drop significantly narrowed (Q1 -29.2%, Q2 -25.9%). Due to increased construction order backlogs, subcontracted housing sales in 2022 are estimated to rise by about 9%.

Researcher Park emphasized, "In Q4, housing sales are expected to rebound significantly as option construction sales from the completion of Daejeon Doan I-Park and construction sales from City O'ciel are recognized. In Q1 2022, Cheongju Gagyeong 4th phase (60.4 billion KRW) will be completed and reflected based on delivery, followed by sales growth led by progress in Suwon Yeongtong 3rd complex, Banjeong 4th and 5th complexes, etc."

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