[Click eStock] "IS Dongseo, Strong Performance Expected in Q2 as Well"

Hyundai Motor Securities Report

[Asia Economy Reporter Minji Lee] Hyundai Motor Securities maintained a buy rating and a target price of 70,000 KRW for IS Dongseo on the 27th, expecting solid performance in the second quarter as well.

In the first quarter, IS Dongseo recorded sales of 589.9 billion KRW and operating profit of 111.7 billion KRW, growing 90.2% and 177.2% respectively compared to the same period last year. The construction division posted sales of 454.2 billion KRW and operating profit of 108.3 billion KRW. The Anyang Knowledge Industry Center was recognized as sales of 192.7 billion KRW based on delivery standards, with an in-house site gross profit margin (GPM) of 34.8% and a subcontracted site GPM of 15.9%.

Following the acquisition of Environmental Energy Solutions, consolidated results have been included from this year. First-quarter sales were 40 billion KRW with an operating profit of 1.4 billion KRW, added to the environmental division’s performance. The shipping division’s results appear to have declined due to a sharp drop in the BCI (Baltic Capesize Index) in the first quarter. In the concrete division, piles recorded a profit, but the PC division posted a loss.

IS Dongseo’s consolidated sales for the second quarter are estimated at 567.4 billion KRW, with operating profit of 95.8 billion KRW, representing growth of 69.2% and 87.2% year-on-year. Construction division sales are expected to be 415 billion KRW with operating profit of 74.7 billion KRW.

Seungjun Kim, a researcher at Hyundai Motor Securities, stated, “It is estimated that the remaining amount (140 billion KRW) of the Anyang Knowledge Industry Center based on delivery standards will be temporarily recognized as sales,”

adding, “However, some raw material price increases are expected, so cost increases may impact the remaining quarters.”

The shipping division reflects a renewed rise in the BCI index, and the concrete division is expected to turn profitable by improving shipment volume and settling first-quarter losses through contract changes in the second quarter.

However, as real estate purchasing sentiment is slowing, continuous monitoring is expected to be necessary. Researcher Kim explained, “Unsold units are increasing in Daegu and the Gyeongnam region, so it is important to continuously watch whether sales promotions succeed.”

Meanwhile, remaining in-house sites include Ulsan Yaeum and Goyang Deogeun Blocks 1, 5, 6, and 7, with sales planned for the end of this year or early next year. These sites are expected to contribute to construction sales from 2023 to 2025.

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