[Click eStock] "Hyundai Construction, Overseas Site Profitability Further Deteriorates Until First Half"

Recovery Expected from the Second Half
Target Price Maintained at 40,000 KRW

On the 21st, Samsung Securities analyzed that Hyundai Construction's profitability at overseas sites would improve slowly until the first half of this year. However, it maintained a 'Buy' investment rating and a target price of 40,000 KRW, anticipating a recovery in the second half.

Heo Jae-jun, a researcher at Samsung Securities, stated, "Hyundai Construction's consolidated sales in the fourth quarter of last year decreased by 5.5% year-on-year to 8.1295 trillion KRW, and operating profit fell by 66.5% year-on-year to 48.5 billion KRW, which is expected to fall short of the consensus (65.2 billion KRW)."

He cited the continued deterioration of profitability at overseas sites as the cause. Researcher Heo predicted, "Following the third quarter, delays in settling claims with clients related to overseas sites have continued, and in the fourth quarter, losses were recognized at Hyundai Engineering's overseas sites, so the profitability of overseas sites is expected to worsen further." It appears that profitability was significantly damaged due to logistics disruptions caused by COVID-19, resulting delivery delays, and soaring construction costs at overseas sites contracted before 2022?2023.

He added, "Since projects with poor margins are scheduled to be completed in the first half of this year, it will be difficult for overseas site profitability to recover quickly for the time being."

Profitability is expected to improve from the second half of the year. Researcher Heo said, "While losses are realized due to project completions, which worsens profitability, as the completion of low-margin sites concludes, a kind of mix improvement will occur." He also forecasted, "Although the profitability of domestic sites that started construction before 2023 is low, the sales proportion within the housing business of those sites will clearly decrease to 73% in 2024, 50% in 2025, and 10% in 2026."

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