[Click eStock] 'Ssangyong C&E' Unable to Overcome Cost Burden

[Asia Economy Reporter Junho Hwang] Yuanta Securities maintained the target price of Ssangyong C&E at 102,000 KRW on the 11th, despite the company's first-quarter performance falling short of market expectations.

In the first quarter of this year, Ssangyong C&E recorded sales of 376.2 billion KRW, an 11.8% increase compared to the same period last year. This was due to the cement price increase of 5.1% in July last year, increased domestic sales volume, and the consolidated performance effect of Green Eco Solution.

However, operating profit was recorded at 400 million KRW, a 98.6% decrease compared to the same period last year. Compared to the previous year, the sharp rise in thermal coal prices and overall increased cost burdens, operating losses (2.4 billion KRW) due to facility expansion and stabilization works at the subsidiary Green Eco Solution, and the disappearance of cost reduction effects related to thermal coal option contracts reflected last year all contributed to the sharp decline in performance.

Yuanta Securities noted that thermal coal prices have been strong amid the Russia-Ukraine conflict, while the cement price increase effect, which was finalized based on this, (15.2%, official price per ton increased from 78,800 KRW to 90,800 KRW) is expected to be fully reflected starting last month.

Researcher Kiryong Kim of Yuanta Securities stated, "Although expectations for the next government's real estate policies, such as expanding housing supply, have not been significantly reflected due to possible pace adjustments, the overall direction remains valid, so it is expected to have a positive impact on increased cement shipments and recovery of the core business."

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