Hanwha Investment & Securities announced on August 26 that it has raised its target price for Daewoo Engineering & Construction from 7,300 won to 22,000 won, a 204% increase, citing expectations for growth in new orders and improved profitability in the housing sector, along with large project wins in nuclear power and LNG.
Song Yu-rim, a researcher at Hanwha Investment & Securities, stated, "Daewoo Engineering has several positive investment points, including growth in new orders, housing improvements, and opportunities in nuclear power and LNG projects."
In the second quarter, Daewoo Engineering reported sales of 2 trillion won and an operating profit of 232.3 billion won. While sales decreased by 10.1% compared to the same period last year, operating profit surged by 182.6%. The housing sector saw a one-time profit, and a significant reduction in last year's large bad debt expenses greatly improved profitability. Even excluding one-time profits, the gross profit margin in the housing sector is estimated to be in the mid-15% range.
The outlook for new orders is also positive. Daewoo Engineering has raised its new order target for the year from 18 trillion won to 27 trillion won, a 50% increase. This is supported by projects totaling 18 trillion won, including the Dukovany nuclear power plant in the Czech Republic, LNG projects in Papua New Guinea and Mozambique, a chemical plant in Nigeria, and the new airport in Gadeokdo.
Song noted, "Considering the continuous decline in order backlog due to the lack of large overseas orders since 2021, this upward revision of the order guidance is certainly positive."
* This article has been translated by AI.
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