 |
(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Minyoung] Daishin Securities has reduced its target price for Daewoo E&C from ₩6,000 to ₩5,400, citing concerns over potential costs and cash flow issues. The firm has maintained its "Buy" rating for the stock.
In its latest report, Daishin Securities noted that the adjustment in target price reflects a 10% decrease, calculated based on the 2024 projected book value per share (BPS) of ₩10,022 and a target price-to-book ratio (PBR) of 0.54. This PBR was determined by applying a 20% discount to the theoretical PBR derived from the PBR-ROE methodology.
For the second quarter of 2024, Daewoo E&C reported a significant decline in financial performance. Sales decreased by 13.8% year-on-year to ₩2.8 trillion, while operating profit plummeted by 51.9% to ₩1.048 trillion. The operating profit margin fell to 4.3%, down 2.4 percentage points from the previous year, missing market expectations.
Despite improvements in the cost ratio for residential construction, which stood at 92.8%, challenges persist. The cost ratio for civil engineering projects surged to 96.7%, driven by increased costs in overseas projects in Singapore and the Middle East. Furthermore, accelerated revenue recognition from the sale of Vietnamese THT land did not sufficiently offset the overall profit due to increased expenses and provisions.
The revised target price reflects ongoing uncertainties regarding potential cost increases and cash flow management, with Daishin Securities expressing caution about the company's future financial performance.
Alphabiz Kim Minyoung (kimmy@alphabiz.co.kr)
