[Click eStock] "Kumho Engineering & Construction Can Achieve Further Profit Growth... Competitiveness in LH Projects in Focus"

On November 18, Sangsangin Securities stated that Kumho Engineering & Construction could achieve further profit growth due to improved cost ratios in its architecture and housing divisions, and emphasized the need to pay attention to its competitiveness in LH projects.

Kim Jinbeom, an analyst at Sangsangin Securities, presented a 'Buy' investment opinion and set a target price of 5,000 won for Kumho Engineering & Construction on the same day.

For the third quarter, Kumho Engineering & Construction reported revenue of 523.4 billion won (a 35.2% increase year-on-year and a 1.4% decrease quarter-on-quarter) and operating profit of 15.4 billion won (returning to the black, a 3.2% decrease), both surpassing market expectations.

The background for this external growth was the low base effect caused by the revenue deduction from last year's big bath, while the housing and civil engineering divisions posted significant year-on-year growth, recording 213.1 billion won (up 34.8%) and 212 billion won (up 71.7%), respectively.

In particular, the gross profit margin (GPM) in the architecture and housing divisions showed a solid recovery, driven by a higher proportion of new projects reflecting increased construction costs. In this earnings announcement, Kumho Engineering & Construction raised its annual operating profit guidance from the previous 21 billion won to over 40 billion won.

Regarding this, Kim Saeryeon, an analyst at LS Securities, pointed out, "The turnaround in profits and improved cash flow from asset sales, considering Kumho Engineering & Construction's past dividend trends, raise expectations for a resumption of dividends."

The company's competitiveness in LH projects was also highlighted. Given that LH's large-scale public housing supply will be focused on the third new towns and land development districts near the Seoul metropolitan area, future growth is expected to center on private investment projects. From January to October this year, Kumho Engineering & Construction's cumulative LH orders amounted to 1.8 trillion won, with two to three additional project orders anticipated. Analyst Kim Jinbeom emphasized, "The key to future performance and share price will be whether the company can prove its competitiveness in private investment projects, where bidding competition is expected to intensify." Analyst Kim Saeryeon also projected, "With the current government's policy stance expanding public-led housing policies and a strong commitment to accelerating the supply of the third new towns, Kumho Engineering & Construction's order pool, which is specialized in LH projects, will also expand accordingly."

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