Hyundai Motor Securities projected on September 18 that Hanssem's rapid profit recovery in the second half of the year will be limited due to the ongoing weak construction market. The firm maintained its investment rating of 'Market Perform' and a target price of 38,000 won.
Shin Dong-hyun, a researcher at Hyundai Motor Securities, noted, "While the revenue from the re-house segment exceeded expectations, the significant decline in B2B sales due to the sluggish construction market led to overall poor sales performance."
For the second quarter of this year, Hanssem reported consolidated sales of 417.2 billion won, a 9.2% decrease compared to the same period last year. Operating profit, however, rose to 11.3 billion won, marking a 400.2% increase, with an operating profit margin of 2.7%.
The re-house business performed relatively well, with apartment sales transactions increasing by 22.6% year-on-year in the first quarter, leading to a 12.8% rise in re-house sales in the second quarter. However, with a 6.6% decrease in apartment sales transactions in June, followed by a mere 0.4% increase in July, there are concerns that the growth momentum in re-house sales may stagnate.
The decline in B2B sales also poses a challenge to recovery. Hanssem's B2B sales typically lag construction starts by about two years and precede completions and occupancy by about two quarters. Currently, the volume of completed projects has decreased by 41.4% year-on-year as of July. Hyundai Motor Securities anticipates that, considering the construction volume since 2023, the volume of completed projects will continue to be low over the next three years.
Shin added, "There is pressure from vendors to raise prices due to rising raw material costs, and tax-related expenses from the merger with Hanssem Nexus are expected to be recognized in the third quarter's operating costs, limiting rapid profit recovery in the second half of the year."
Hyundai Motor Securities has revised its sales forecast for Hanssem this year down from 1.779 trillion won to 1.657 trillion won, a decrease of 6.8%. The sales forecast for next year was also lowered from 1.870 trillion won to 1.714 trillion won, an 8.3% reduction. However, the operating profit forecast for this year was raised from 35 billion won to 37 billion won, a 5.3% increase.
Shin maintained the target price of 38,000 won and the 'Market Perform' rating, considering the reduced rate of increase in housing prices and the gradual recovery of supply volumes.
* This article has been translated by AI.
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