[Click eStock] "DL E&C, Operating Profit Expected to Increase Next Year Despite Housing Slump"

2024 Q4 Performance and 2025 Outlook
Operating Profit Expected to Increase in 2025 Despite Weak Market Conditions

Hana Securities analyzed on the 27th that DL E&C has the resilience to withstand difficult market conditions next year. They maintained a 'Buy' investment rating and a target price of 39,000 KRW. The target price was calculated by applying a target price-to-earnings ratio (P/E) of 6.0 times to the projected earnings per share (EPS) for 2025. DL E&C's closing price on the previous trading day was 32,400 KRW.

According to Hana Securities, DL E&C's consolidated Q4 revenue is estimated to be 2.3 trillion KRW, down 1.6% year-on-year, while operating profit is expected to increase by 21.0% to 107.5 billion KRW. Despite sluggish sales in the housing sector, the plant sector sales are expected to continue growing steadily. Housing GPM is projected at 9%, civil engineering GPM at 10%, and plant GPM at 16%, with DL Construction's GPM forecasted at 7.6%. Additionally, the acquisition of 68.6 billion KRW in debt by subsidiary DL Construction will be reflected as non-operating expenses.

Q4 expected orders are estimated at 3.2 trillion KRW, with an order backlog of 30.1 trillion KRW. The number of housing units to be started by DL E&C and DL Construction is expected to be approximately 2,000 units and 667 units, respectively. For the entire year of 2024, DL E&C is expected to complete construction starts for 8,000 units, and DL Construction for 3,900 units.

For 2025, DL E&C's consolidated revenue is projected at 8.0 trillion KRW (-2.6% yoy), and operating profit at 342.2 billion KRW (+20.4% yoy). Housing sales are expected to decrease by 9.5% year-on-year, and DL Construction's sales are also expected to decline by 3.5%. This is attributed to the sluggish number of housing starts in 2024. Since the number of housing starts for both DL E&C and DL Construction was lower than the previous year, there is a high possibility of a decrease in housing sales in 2025. However, the housing cost ratio is expected to improve in 2025.

Hana Securities researchers Seungjun Kim and Minho Ha stated, "DL E&C has a strong financial position with net cash flow exceeding 1 trillion KRW, giving it the resilience to endure difficult market conditions next year. However, a conservative view of the sales market may hinder a rapid recovery at the turnaround point after next year."

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