Shinhan Financial Investment said GS Engineering & Construction's third-quarter operating profit was below the consensus, but solid earnings are expected in the fourth quarter.
As a result, the target stock price remained at KRW 57,000 and investment opinion 'buy' was maintained.
Shinhan Financial Investment estimates that GS Engineering & Construction's third-quarter sales will be 2.2 trillion won and operating profit will be 152.3 billion won.
This is a decrease of 6.3% and 27.3%, respectively, compared to last year. "GS Engineering & Construction suffered LD problems following a bond call (contract execution guarantee) in the second quarter at overseas sites," Shinhan Financial Investment said.
"As a result, the cost ratio recorded 117% and 136% due to sales and operating profit deductions of 100.7 billion won and 42.3 billion won from civil engineering and plants, respectively.".
Shinhan Financial Investment said, "Excluding the impact of the LD, the performance exceeded the estimate by nearly 30%.".
"GS Engineering & Construction's cumulative sales performance this year has achieved 52% of its target with 17,000 households,"Shinhan Financial Investment said. "It will be able to make good sales as there are many large sites with more than 1,000 units.".
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
