[Click eStock] "Daewoo E&C Target Price Raised from KRW 8,000 to KRW 49,000"

Hana Securities has significantly raised its target price for Daewoo Engineering & Construction, citing a strong surprise performance in the company's building construction division. The target price has been dramatically increased from KRW 8,000 to KRW 49,000.

Seungjun Kim, a research analyst at Hana Securities, stated on April 29 that, "Daewoo Engineering & Construction's first-quarter revenue reached KRW 2 trillion and operating profit came in at KRW 255.6 billion, far exceeding both consensus and our estimates."

Kim explained, "The background for exceeding consensus was the margin surprise in the building and housing sector. During the fourth quarter 2025 earnings announcement, the company indicated that it expected housing and building margins to be over 13%. In the first quarter of this year, the building and housing gross profit margin (GPM) reached 20.8%." He added, "Overall, there was a positive mix improvement effect, as well as a downward adjustment of the expected cost ratio (KRW 58 billion) and profit from settlement and contract increase effects (KRW 43 billion)." Excluding these amounts, he estimated the GPM to be around 13%.

He further projected second-quarter results with revenue of KRW 2 trillion and operating profit of KRW 143.5 billion. Kim noted, "All building sites that began construction in 2021 have been completed, and only 7-8% of sites started in 2022 remain, so margins in 2026 are expected to improve compared to 2025." He also said, "The revenue share from self-development projects started in 2025 is expected to expand from 7% to 14%, which could further improve the margin mix." For the second quarter, he assumed a margin of 13.5% (GPM).

The newly presented target price of KRW 49,000 marks a significant jump from the previous KRW 8,000. The valuation was calculated by applying a target PE ratio of 40.0 times to the estimated earnings per share (EPS) for 2026. Kim stated, "We expect a nuclear power plant contract from the Czech Republic to be secured in the second quarter, and between 2027 and 2028, we are pursuing nuclear power orders in Vietnam, the Czech Republic, and the United States." He added, "There is also a possibility of being included in the MSCI Korea Index. These expectations warranted a premium in the valuation."

The previous day, Daewoo Engineering & Construction closed regular trading at KRW 37,150 per share.

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