[Edaily Reporter Kwon Oh-seok] Hanwha Investment & Securities announced on the 17th that it is maintaining its “Buy” investment rating and target price of 5,500 won for #HL D&I.

Song Yu-rim of Hanwha Investment & Securities explained, “Given the relatively high visibility of earnings improvement, the company is expected to emerge from its current state of excessive undervaluation if it accompanies this with efforts to boost shareholder returns, secure additional growth drivers, and improve its financial position.”
The firm projected that HL D&I’s second-quarter revenue would reach 4330억 won and operating profit 246억 won, representing year-over-year increases of 6.4% and 24.3%, respectively. He said, “In the civil engineering segment, a simultaneous recovery in revenue and profit margins is expected as we move into the second half of the year, driven by revenue from new projects, while the housing segment is projected to see continued revenue recovery and margin improvement.” He added, “Although higher SG&A expenses—due to factors such as promotional costs—represent a burden on earnings, this is being offset by increased revenue from the company’s own projects, which have exceptionally high margins, and the stabilization of cost ratios in contracted housing projects.”
He continued, “Since we built up a record-high order backlog at the end of last year and have already confirmed healthy housing margins, profit growth through next year is virtually a foregone conclusion barring any unforeseen variables.” “Even with a one-time cost increase in the civil engineering division during the first quarter, the company is maintaining its profit growth trend. And even if we estimate annual SG&A expenses somewhat higher to account for the possibility of bad debt provisions at sites with sluggish pre-sales, the reason we can still expect annual profit growth is entirely due to the housing business,” he emphasized.
Analyst Song added, “Investor sentiment toward housing stocks has significantly weakened amid growing concerns that housing margins could be eroded by the recent turmoil in the Middle East, and the company’s stock price has given back all the gains it made since the beginning of the year,” noting, “Now that peace talks are in their final stages, a recovery in the stock price seems likely.”