Daewoo E&C's stock price rose following overseas contract wins in nuclear power and other sectors, but securities firms analyze that the housing business remains the primary earnings driver. The construction company is forecast to achieve Q2 operating profit of 165.9 billion won, double the year-ago figure, supported by years of accumulated reputation and cost management capabilities, according to a consensus of eight major domestic securities firms compiled by Yonhap Infomax on the 22nd. The forecast reflects completion of high-cost housing projects and expanded proportion of self-developed projects with 20% gross profit margins, driving profitability improvements despite a 10.33% revenue decline to 238.4 billion won.
Daewoo E&C Q2 Financial Forecast Shows Doubled Operating Profit
Yonhap Infomax compiled earnings consensus from eight major domestic securities firms within the past month. The consolidated Q2 operating profit for Daewoo E&C is projected at 165.9 billion won, representing a 101.89% increase from the same period last year. Q2 revenue is estimated at 238.4 billion won, down 10.33% year-over-year. Profitability improvements stem from cost rate reductions as high-cost construction sites reach completion and the company expands its self-developed project portfolio with approximately 20% gross profit margins.
Housing Business Drives Profitability with 4,842 Units Sold in Q2
Daewoo E&C sold 4,842 housing units in Q2, according to Kiwoom Securities. Construction starts have increased since the end of last year, with housing construction revenue expected to bottom this year. LS Securities researcher Kim Se-ryeon stated that if adjustments to estimated completion costs or settlement profits are reflected as in the previous quarter, the company could record even better results. The housing segment remains the core earnings driver despite recent attention on overseas infrastructure projects.
Nuclear Power Projects Face Delayed Timelines in Czech Republic and Vietnam
Global nuclear power plant orders are increasing, ensuring mid- to long-term growth, but project materialization requires time. Cost negotiations with Korea Hydro & Nuclear Power for the Czech Dukovany nuclear plant construction are prolonged. Vietnam's contractor selection schedule for nuclear plant construction is also delayed. Shinhan Securities researcher Kim Sun-mi noted that while order delays are disappointing, expanded progress rates on projects won in Turkmenistan and Mozambique will defend against plant revenue declines.
Accounts Receivable Monitoring Required Amid Bad Debt Risk
Yuanta Securities researcher Ryu Tae-hwan estimates that accounts receivable in Q2 maintained similar levels to Q1, but the accounts receivable turnover ratio declined due to reduced business scale. He pointed out that the ratio of accounts receivable to revenue remains at a high level, requiring monitoring for potential bad debt occurrences. This financial metric represents a key risk factor for the company's near-term performance.
H2 Pipeline Includes Mozambique LNG and Data Center Projects
Major order pipelines for the second half include Mozambique LNG Area 4, the Czech nuclear plant, and Vietnam Ninh Thuan Unit 2 Team Korea bidding. Data centers represent another sector where Daewoo E&C expects to benefit. The company signed a public-private partnership agreement in January for artificial intelligence data center construction in Jangseong-gun and Gangjin-gun, Jeollanam-do. Daewoo E&C formed a data center task force to develop market entry strategies.
FAQ
What is Daewoo E&C's Q2 operating profit forecast?
Daewoo E&C is forecast to achieve Q2 operating profit of 165.9 billion won, representing a 101.89% increase from the same period last year, according to a consensus of eight major domestic securities firms compiled by Yonhap Infomax on the 22nd.
Why did Daewoo E&C's profitability improve despite lower revenue?
Profitability improvements stem from cost rate reductions as high-cost housing construction sites reach completion and the company expands its self-developed project portfolio with approximately 20% gross profit margins, driving better margins despite a 10.33% revenue decline to 238.4 billion won in Q2.
What nuclear power projects is Daewoo E&C pursuing?
Daewoo E&C is in prolonged cost negotiations with Korea Hydro & Nuclear Power for the Czech Dukovany nuclear plant construction, while Vietnam's contractor selection schedule for nuclear plant construction is also delayed, though the company maintains projects in Turkmenistan and Mozambique.
