[Click eStock] GS Geonseol, Provisions Reflected in Second Half... Target Price Down 12%

Daishin Securities Report
Stock Price Decline Following Geomdan Accident

Daishin Securities maintained a buy rating on GS Construction on the 3rd and set a target price of 28,000 KRW, down 13% from the previous price.

The company's expected sales for the second quarter are 3.6 trillion KRW, and operating profit is projected to be 188.2 billion KRW, increasing by 19.4% and 14.5% respectively compared to the same period last year. The operating profit margin is expected to be 5.2%.

This is because the sales plan for the Vietnam Nabe 1-1 district is 120 billion KRW, which is an increase from 79 billion KRW in the first quarter, leading to an expected improvement in the sales mix. Assuming that no provisions related to the Geomdan apartment accident occur in the second quarter, the domestic cost ratio deterioration factor is estimated to be minimal. Overseas sites are also understood to have no cost-incurring reasons.

So far, the company is estimated to have sold 6,980 units. This marks a 35% progress rate compared to the annual target of 19,881 units. Researcher Lee Taehwan analyzed, "Considering that sales have been successfully conducted without any unsold units so far, the annual target is expected to be maintained."

The company plans to announce the results of the Geomdan site investigation within this month. Considering this, a large-scale provision in the third quarter is inevitable.

Researcher Lee said, "It is difficult to predict because the cost scale will vary depending on the scope of reconstruction, but we are lowering the operating profit estimate for the third quarter," and added, "Restoring trust will be crucial in the second half." Currently, GS Construction's stock price has fallen about 14% as investment sentiment turned negative following the Geomdan accident.

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