"GS Engineering & Construction Poised for Earnings Upgrade on 'Nuclear Power Hopes'... Target Price Raised" [Click e-Stock]

On April 15, Shinhan Investment Corp. raised its target price for GS Engineering & Construction to 48,000 won, maintaining a "Buy" rating. The company cited the potential for improved earnings due to expectations surrounding GS Engineering & Construction's possible participation in nuclear power plant construction projects in Vietnam.

Sunmi Kim, a research analyst at Shinhan Investment Corp., stated, "Despite concerns over the recent sharp rise in the share price, we believe there is sufficient room for further appreciation considering the company’s solid performance, anticipation of joining the Vietnam nuclear power plant 'Team Korea,' and the currently low valuation with a price-to-book ratio (PBR) of just 0.7 times based on the current share price."

She added, "As of the second quarter, the company has already achieved 70% of its annual housing pre-sale target, and the pipeline for overseas plant bidding is expected to expand. In such a case, earnings are likely to improve from next year onwards."

Shinhan Investment Corp. projected that GS Engineering & Construction would report consolidated first-quarter sales of 2.7 trillion won and operating profit of 107 billion won, meeting market expectations for operating profit. Although the number of housing project sites has decreased, leading to lower sales and completion-settlement gains, the company was able to defend its performance through improved housing profitability and a reduction in one-off expenses.

Kim noted, "If the war in the Middle East is prolonged, some impact could become apparent from the third quarter onwards. However, considering the improved cost execution ratio resulting from lower outsourcing costs last year, any actual decline in profitability should be limited."

While earnings in the first half of this year may be low, the outlook for the second half appears stronger. This is because new housing supply is expected to reach 10,000 units, surpassing the annual target of 14,000 units, and three data centers with a total value of 1 trillion won are scheduled to begin construction in the second half. Kim further commented, "We are also positively considering the expansion of overseas plant orders, Middle East reconstruction projects, and Southeast Asian gas plant contracts, all of which are likely to contribute to earnings from next year onwards."

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