Kyobo Securities announced on July 15 that it has raised its target price for DL E&C from 55,000 won to 73,000 won, reflecting improvements in profitability in the housing construction sector, an increase in urban redevelopment project orders, and expectations for new contracts related to small modular reactors (SMR).
Lee Sang-ho, a researcher at Kyobo Securities, stated, "The margin improvement in the housing construction sector is more pronounced than expected. Urban redevelopment project orders are continuously accumulating, and there are expectations for expanded contracts in SMR, data centers, and Middle Eastern reconstruction projects."
He added, "For the second quarter, consolidated revenue is projected to be 1.68 trillion won, with operating profit expected to reach 129.2 billion won, slightly exceeding market consensus. Both DL E&C and DL Construction are expected to show significant improvements in gross profit margin (GPM) due to better housing construction mix."
Lee also noted, "The impact of rising costs due to the Middle Eastern conflict is not expected to be significant, and the plant and civil engineering sectors are likely to maintain their existing trends."
The researcher expressed optimism about the expansion of urban redevelopment project orders based on high brand preference, stating, "If the effects of securing large projects like the Hannam 5 District continue, new housing construction orders could exceed guidance by more than 15%."
Furthermore, he mentioned, "We are expanding our order base through diversification of our business portfolio. If nuclear-related investments are announced in July and visibility in the plant sector increases, further upward adjustments in valuation may be possible."
* This article has been translated by AI.
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