Hyundai E&C’s earnings likely to surge in Q1

Hyundai Engineering and Construction Co., Hyundai Motor Group’s main construction arm, is expected to post a significant increase in its earnings in the first quarter this year.

According to Shinyoung Securities, Hyundai E&C will likely post first-quarter sales of nearly 3.84 trillion won ($3.54 billion) and operating profit of 228.1 billion won. The figures are respectively 16.7 percent and 21.6 percent higher than the same period last year.

Buoyed by the expectations, a number of local trading houses raised the target price for Hyundai E&C shares.

While the securities company raised the price to 70,000 won from 65,000 won, a Kyobo Securities analyst reset the target to 72,000 won from 55,000 won.

In addition, changes in the company’s subsidiaries are also expected to boost the construction firm.

Last year, Hyundai E&C subsidiaries ― Hyundai Engineering and Hyundai Amco ― merged, and the combined entity is expected to face little difficulties in meeting the target set for this year.

According to industry data, the $3.5 billion Turkmenistan gas desulfurization plant contract that the subsidiary won in October accounts for 67 percent of the target for this year.

In a separate development, the company announced that it would launch a new high-end housing brand next month.

According to the company, the new brand is symbolic of its intentions for this segment of the market. It also pledged to strengthen customer services.

While Hyundai E&C has long been a major player in the country’s construction industry, the share of housing in its entire portfolio is about an third of the industry average.

On average more than 30 percent of local construction firms’ portfolios comprise housing projects, but for Hyundai E&C it is only about 10 percent.

By Suk Gee-hyun (monicasuk@heraldcorp.com)