Kiwoom Securities said on the 16th that GS Engineering and Construction could have an advantage in development projects thanks to land it secured in Vietnam in the past. It kept a target price of 27,000 won and a "buy" rating. The previous trading day's closing price of GS Engineering and Construction was 19,460 won.
GS Engineering and Construction is engaged in a business that supplies premium housing through development projects in Vietnam. Kiwoom Securities expected that as Vietnam's gross domestic product (GDP) growth rate continues above 6%, the real estate value as an investment asset will grow further.
Shin Dae-hyeon, an analyst at Kiwoom Securities, said, "As premium housing with strong demand as an investment asset stands out in price gains, GS Engineering and Construction plans to supply housing that meets such demand going forward," and added, "In Vietnam, preference for foreign developers is high, which means GS Engineering and Construction will also benefit."
In particular, GS Engineering and Construction has secured land use rights in Vietnam since 2007. As a result, gains from land appreciation and last year's amendment to the Land Law are expected. Shin said, "Higher land prices and officially assessed values have raised entry barriers for new operators, and GS Engineering and Construction will be able to enjoy high profitability through land already secured going forward."
GS Engineering and Construction is currently carrying out three projects in Vietnam: the Thu Thiem project, the Nha Be project, and the Long Binh project. All are located in key areas under Ho Chi Minh City's development plan. Kiwoom Securities said that, in the short term, GS Engineering and Construction's revenue from these will not rise quickly, but full-scale ground-breaking is likely to begin next year.
Kiwoom Securities also noted that the sale price for GS Inima was set at 1.68 trillion won. Shin said, "Most of the cash received from the disposal of GS Inima will be used to repay borrowing fund," and added, "As the downsizing of the new business segment due to the disposal of GS Inima appears inevitable, the roles of overseas development projects, including Vietnam, and modular dwellings are important."