Jungheung Construction "Increase in Debt Guarantee Amount Due to Rise in New Housing Sales"

On the 6th, Jungheung Construction clarified regarding reports of a sharp increase in debt guarantees, stating, "The increase occurred at sites where sales have been completed and is not related to insolvency risk."

On the 6th, CEO Score, a corporate data research institute, announced that out of 106 companies in 31 groups with construction affiliates among large business groups surveyed from 2021 to 2023, 38 construction companies showed an increase in debt guarantees.

This survey counted only construction companies that provided debt guarantees to clients and prospective residents for construction projects from 2021 to the end of last year. According to the results, Jungheung Construction had the highest increase in debt guarantees at 441%. Jungheung Construction’s debt guarantees rose from 256.6 billion KRW at the end of 2021 to 1.387 trillion KRW at the end of last year. Its affiliate, Jungheung Togeon, increased from 834 billion KRW to 3.6794 trillion KRW, a 341% rise. Daewoo Construction, acquired by the Jungheung Group, saw a 35.3% decrease in debt guarantees. While the increase in debt guarantees partly reflects an expansion in order volume, there is also a significant risk that if projects are delayed due to the real estate market downturn, insolvency could be transferred to the guarantor.

In response, Jungheung Construction explained that the increase in debt guarantees is due to a rise in new pre-sale projects. Debt guarantees consist of interim payment loan guarantees, pre-sale guarantees, and defect repair guarantees. Jungheung Construction stated, "Most of the debt guarantees mentioned in the survey occurred at sites where sales have been completed and are not related to insolvency risk," adding, "Going forward, the Jungheung Group plans to solidify its fundamentals through active pre-sale projects."

As of 2022, Jungheung Construction’s debt ratio stands at 64%, and Jungheung Togeon’s at 104%.

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