Hyundai Motor Securities on the 16th said it expects orders and sales centered on public housing at Kumho E&C to continue to expand. It maintained a Buy rating and a target price of 5,700 won. Kumho E&C's previous closing price was 4,015 won.
Kumho E&C posted consolidated sales of 453.4 billion won and operating profit of 12.1 billion won in the first quarter this year. Sales fell 3.1% from a year earlier, but operating profit rose 112.3%.
Shin Dong-hyun, an analyst at Hyundai Motor Securities, analyzed that "sales dipped slightly year over year due to delays in civil engineering progress, but operating profit increased year over year thanks to solid profitability in the housing segment and a recovery in profitability in civil engineering."
Some schedule delays occurred in civil engineering, but this was largely due to the holiday effect and is expected to be a one-off factor. With the backlog having increased significantly, sales are also projected to normalize starting in the second quarter.
The gross profit margin (GPM) of the housing segment came in at 13.4%, down slightly from 17.4% in the previous quarter. However, excluding one-off expenses, it is assessed to be still solid at close to 15%.
Shin explained that "as sales from private participation projects, which are expected to be profitable, are newly added, there is additional room for upside."
Including the third new towns, Kumho E&C's public housing orders totaled 700.8 billion won in 2023, 648.4 billion won in 2024, and 1.9458 trillion won in 2025, rising rapidly since last year.
This year's nationwide public pre-sale supply is also expected to be about 37,000 households, up 39.9% from a year earlier, so the trend of order intake and sales expansion centered on public housing is projected to continue.
Shin explained that "under the phase of expanding public housing, the investment appeal of Kumho E&C, a representative beneficiary in terms of earnings, remains intact."