NH Investment & Securities on the 1st said GS Engineering & Construction's construction institutional sector results will improve through cost stabilization. It maintained its "Buy" investment rating and raised its target price to 35,000 won from 30,000 won. The previous trading day's closing price for GS Engineering & Construction was 25,100 won.
Lee Eun-sang, an analyst at NH Investment & Securities, judged that this year GS Engineering & Construction will see improved results based on cost stabilization.
The analyst said, "The architecture and dwellings institutional sector will contribute to further improvement in the cost ratio and companywide profit as high-cost sites started between 2020 and 2022 are sequentially completed."
The plant construction institutional sector also appears likely to show a trend of cost stabilization. The analyst said, "Cost stabilization is expected as the progress rates rise at domestic sites such as the Northeast Asia liquefied natural gas (LNG) hub terminal and LG Chem's Aurora project."
Accordingly, the analyst forecast this year's operating profit at GS Engineering & Construction at 540 billion won, up 23% from a year earlier.
A foundation has also been laid for expanding new businesses through improved financial soundness. The analyst explained, "The proceeds from the sale of GS Inima are scheduled to flow in during the second half of this year." GS Inima, GS Engineering & Construction's water treatment subsidiary, was sold to TAQA, the UAE state energy company, for 1.68 trillion won.
The sale proceeds will first be used to repay liabilities. After that, GS Engineering & Construction is expected to push a business reorganization focused on expanding new businesses.
The analyst said, "The disposal proceeds will be prioritized for liability repayment, contributing to stronger financial soundness," and evaluated, "It is also positive that after the sale of GS Inima, the company will be reorganized around high value-added new businesses such as modular, overseas urban development, data centers, and nuclear power."