[Click eStock] "Mitigating Housing Risks... HL D&I Target Price Up"

Hanwha Investment & Securities stated on the 3rd that regarding HL D&I, "As concerns related to housing such as contingent liabilities reduction, limited unsold inventory risk, recovery of volume and cost ratio are being alleviated, a stock price recovery should follow," and raised the target price from the previous 3,400 KRW to 3,800 KRW while maintaining the 'Buy' investment rating.

On the same day, Yoorim Song, a researcher at Hanwha Investment & Securities, said, "The target price was calculated by applying a target multiple of 0.35 times to the 12-month expected book value per share (BPS)," explaining the rationale.

HL D&I's sales for the first half of the year were 791.8 billion KRW, and operating profit was 29.5 billion KRW, increasing by 8.9% and 55.4% respectively compared to the same period last year. Researcher Song said, "This is due to the recognition of sales from the in-house project Bucheon Sosa mixed-use complex (130 billion KRW, 92% occupancy rate in the first half), completion settlement gains, and the effect of increased contract amounts, resulting in a gross profit margin (GPM) of the development construction segment in the first half reaching the 13% range."

Performance defense through in-house projects is expected to continue for the time being. In Incheon Jakjeon-dong (100% sold, 37% construction progress, 210 billion KRW), sales are ongoing. Icheon Ami (amount undisclosed) and Ulsan Taehwagang (163.8 billion KRW) are scheduled to start construction in the fourth quarter of this year and next year, respectively.

Researcher Song analyzed, "The volume appears to be recovering from the bottom last year," adding, "New orders in the first half amounted to 596.3 billion KRW, about a 58% increase compared to the same period last year. The housing supply plan is also about 5,580 units annually (968 units supplied in the first half), which is approximately 48% higher than the average of the past three years."

He also added, "At the same time, financial risks are gradually being resolved. As of the end of July, the balance of undrawn project financing (PF) guarantees (excluding urban maintenance) was 17 billion KRW," and "The pre-sale rate of sites under construction is estimated to be around 93%. Current borrowings stand at 733 billion KRW (debt ratio 263%), but partial repayment is planned through non-core asset sales and cash collections in the second half, so an improvement in the debt ratio by the end of the year is also expected."

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