Doosan Construction recorded the largest operating profit in 10 years and improved its financial stability, leading to an upgrade in its credit rating. After being acquired by Q Capital Partners, a private equity firm, in 2021 due to significant losses, Doosan Construction has reportedly succeeded in strengthening its financial structure. However, there are concerns that the private equity firm may pursue short-term performance improvement strategies to resell the company.
On the 7th, according to the credit rating and construction industries, Korea Ratings upgraded Doosan Construction's credit rating for corporate paper (CP) and electronic short-term bonds from B to 'B+' on the 29th of last month. A notch is a detailed unit of credit rating represented by adding '+, 0, -' to an alphabet. The analysis by Korea Ratings indicates that the financial structure is improving through capital expansion, and stable profit generation is being achieved.
Park Chan-bo, a senior researcher at Korea Ratings, said, "Doosan Construction had a low credit rating compared to its business competitiveness due to non-performing assets and long-term unconstructed business sites, but recently it has been generating stable operating profits and its financial structure is gradually improving."
Doosan Construction recorded an operating profit of 108.0918 billion won on a consolidated basis last year. This is a 77% increase from the previous year's 60.98 billion won, marking the highest performance in 10 years since 2014 (about 132.8 billion won). Compared to two years ago in 2022 (30.19 billion won), the operating profit has increased more than threefold.
The performance of Doosan Construction's premium residential brand 'Doosan We've the Zenith' also had a positive impact on improving its financial structure. Doosan Construction recovered 27.1 billion won from the sale of 'Doosan We've the Zenith Central Yongin', which was sold in March last year in Samga-dong, Yongin City, and also sold out 'Doosan We've the Zenith Ocean City' from the 'Uam 2 redevelopment' project in Uam-dong, Nam-gu, Busan, recovering 52.6 billion won.
The improvement in the financial structure of ValueGross, a subsidiary of Doosan Construction, also contributed to strengthening Doosan Construction's financial stability. ValueGross is a company newly established by Doosan Construction through a physical division in 2020. It brings together the assets, liabilities, and contracts of business sites, such as the Ilsan We've the Zenith commercial complex and Incheon Hakik Doosan We've apartments, that have not been sold smoothly, and acts as a sort of 'bad bank.'
At the time of its establishment, Doosan Construction held 69.5% (365,372 shares) of equity, while Doosan Qvex held 30.5% (160,000 shares) of ValueGross. Doosan Qvex acquired its equity for 80 billion won and received the right to sell its stake at a set price after 3 years, known as a put option. If Doosan Qvex claims the put option, ValueGross must repay, which is considered a form of liability. However, as the claim period expired last year, Doosan Qvex became a long-term shareholder and the shares that were recognized as liabilities were converted to equity.
Lee Eun-hyung, a research fellow at the Korea Construction Policy Institute, said, "While the improvement in the financial statements is a good sign, corporations owned by private equity funds often sell real estate assets or cut personnel to increase profits in order to raise corporate value for reselling, so we need to be cautious that Doosan Construction is not one of those cases." The research fellow added, "It will take time to assess whether Doosan Construction has truly increased its corporate value by transforming into a structure that can continuously generate stable profits in the long term."
Meanwhile, as of last year, Doosan Construction's construction capability evaluation rank is 32nd. Evaluations also indicate that Doosan Construction's construction capability is not significantly inferior when compared to KyeRyong Construction Industrial (17th rank with a BBB rating), Dongbu Corporation (22nd), and Hanshin Engineering & Construction (28th).
한편, 지난해 기준 두산건설의 시공능력평가순위는 32위다. 두산건설의 시공능력은 BBB 등급의 신용을 보유하고 있는 계룡건설산업(시공능력평가 17위), 동부건설(22위), 한신공영(28위) 등과 견줘 크게 뒤지지 않는다는 평가도 나온다.