[Click eStock] "HDC Hyunsan, Clear Direction for Performance Improvement... Target Price Maintained"

Shinhan Investment Corp. maintained its buy rating and target price of 26,000 KRW on June 26 for HDC Hyundai Development Company, stating that "the direction of earnings improvement is clear, so we recommend buying from a mid- to long-term perspective." The previous day's closing price was 16,180 KRW.

On the same day, researchers Sunmi Kim and Jiwoo Lee from Shinhan Investment Corp. stated, "The consolidated results for the fourth quarter of last year showed sales of 1.1 trillion KRW, a 25.5% increase compared to the same period last year. Operating profit was 77.5 billion KRW, up 4.3% from the same period last year. The operating profit exceeded market expectations by 20.2%."

Based on steady sales, profitability improved across all business sectors without one-off gains or losses. Researcher Kim said, "During the raw material price surge in 2022, the volume of new construction starts was reduced, and normalization has been underway since last year." She added, "The profitability improvement at the stage when the progress rate of already started sites expands is positive in terms of increasing confidence in earnings from this year onward."

The market is focusing on the development project around Gwangwoon University Station. This project is expected to significantly influence the overall performance of HDC Hyundai Development Company due to its scale (approximately 4.5 trillion KRW) and profitability (GPM over 20%). The company plans to start construction by the end of June and begin sales in August. However, considering the weakened investment sentiment in the construction industry following the Taeyoung Construction incident and deteriorating housing indicators, the possibility of construction delays needs to be taken into account. As it is a self-developed project where financing costs, sale prices, and sales rates are all directly linked to profitability, it may be sensitive to external conditions.

The variable is the housing demand trend. Researcher Kim explained, "Strengthened loan regulations and reduced policy mortgages are burdensome factors," adding, "Earnings estimates may change depending on fluctuations at the time of construction start. However, this is a single project that will generate more than twice the profits of the construction volumes in 2022 and last year. High earnings growth after construction start seems certain."

She further stated, "The stock price has rebounded rapidly since November last year. Although volatility in the stock price may increase depending on interest rate forecasts and housing demand indicators, the direction of earnings improvement is clear. We recommend buying from a mid- to long-term perspective."

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