[Edaily Reporter Kim Hyung-il ] HYUNDAI MOTOR SECURITIES assessed that HYUNDAI DEVELOPMENT COMPANY(294870)posted third-quarter earnings that exceeded market expectations, driven by a recovery in sales of in-house housing projects and improved profitability in outsourced housing projects. Forecasting that the simultaneous improvement in both the in-house and outsourced housing segments will continue through next year, the firm maintained its “Buy” rating and raised the target price from 28,000 won to 30,000 won.

On the 26th, Shin Dong-hyun, an analyst at HYUNDAI MOTOR SECURITIES, reported that IPARK HYUNDAI DEVELOPMENT COMPANY’s third-quarter consolidated revenue reached 1.0821 trillion won, up 2.8% year-over-year and 18.3% quarter-over-quarter. Operating profit reached 165.7 billion won, up 127% year-over-year and 34.9% quarter-over-quarter. The operating profit margin stood at 15.3%, exceeding market consensus.

Researcher Shin assessed that it was positive to see both a rapid recovery in sales of in-house housing projects and improved profitability in outsourced housing projects. He predicted that the positive revenue mix effect resulting from these business structure improvements would continue steadily through next year.

In the in-house housing segment, Seoul One i-Park is contributing to revenue as expected, with construction progress currently at about one-third of the total project. Although the gross profit margin (GPM) for in-house housing declined quarter-over-quarter due to the inclusion of revenue from the relatively less profitable Cheongju Gae-gyeong Phases 7 and 8, the outlook suggests that profitability could improve again as construction progresses at Seoul One i-Park, given the scale of its revenue. The combined scale of the Cheongju Gae-gyeong Phases 7 and 8 projects is 1 trillion won.

In the outsourced housing segment, revenue from large-scale projects such as Paju Unjeong i-Park is also set to ramp up in earnest starting in the second half of the year. Sales are currently underway for Cheonan i-Park Phases 3 and 4, with a combined project value of 800 billion won. Given that Phases 1 through 6 all recorded sales rates in the 90% range, Phase 3 is also expected to contribute to expanding the share of revenue from in-house housing projects. Cheonan i-Park Phase 3 is an in-house project, while the rest are outsourced projects.

HYUNDAI MOTOR SECURITIES assessed that earnings visibility is high, as both the in-house and outsourced housing segments are expected to see revenue growth and improved profitability. Analysts note that the potential for sustained earnings growth is also increasing, as additional in-house projects are sequentially entering the presale and construction phases.

The target price increase reflects the rise in book value per share (BPS). HYUNDAI MOTOR SECURITIES maintained its target price-to-book (P/B) ratio at 0.51x, unchanged from the previous estimate, and raised the target price to 30,000 won by applying a 12-month forward BPS of 59,381 won. This P/B ratio conservatively applies the upper end of the 2022 P/B range, a period marked by a mix of strict housing regulations and safety concerns surrounding IPARK HYUNDAI DEVELOPMENT COMPANY.

Valuation attractiveness was also highlighted as an investment point. IPARK HYUNDAI DEVELOPMENT COMPANY’s 12-month forward P/B ratio stands at 0.35x, below the sector average of approximately 0.6x, and its dividend yield is estimated to be over 5%. The assessment is that the stock offers investment appeal, especially when considering the gradual recovery of the pre-sale market.