GS E&C Takes Responsibility for Apartment Collapse and Announces Reconstruction
Incheon-based GS E&C has declared that it will take full responsibility for the collapse of an underground parking lot at the Geomdan New Town apartment complex that occurred in April. The company has committed to completely rebuilding all 1,666 households affected by the incident. This announcement comes in the wake of a loss of public trust in construction companies due to recent events. As a result, investor sentiment towards construction stocks has been severely impacted, with the overall market experiencing a freeze.
Differential Coverage Advised for Securities Industry Experts
Experts in the securities industry are recommending differential coverage for construction stocks. Each company’s core business differs, and therefore, it is crucial to pay attention to the real estate stocks that may be hidden within the GS E&C scandal. The stock price of GS Construction fell by 80 won (0.56%) on the 14th, down to 14,170 won. This decline continued the downward trend that started after the collapse of the Geomdan car park, leading to a 24% decrease in stock price this month. In contrast, construction companies such as Daewoo E&C, Hyundai E&C, and Samsung Engineering saw a rise of about 1%. Consequently, the construction sector index ended slightly stronger, thanks to the positive performance of these companies.
Clearing Skies for the Entire Construction Industry
Following the Geomdan apartment accident, built by GS E&C, the gloom that had settled over the entire construction industry is slowly dissipating. Companies focusing on overseas plants and civil engineering projects rather than the domestic housing market and sluggish apartment sales are particularly benefiting from their strong performance and witnessing improvements in their stock prices.
Daewoo E&C, located in Euljiro, Jung-gu, Seoul, is one such example. The company is expected to deliver outstanding results in the second quarter due to its overseas orders. Shinhan Investment & Securities predicts that Daewoo E&C’s second-quarter sales profit and operating profit will increase by 24% and 140% respectively, reaching KRW 3.281 trillion and KRW 207.7 billion. Notably, the operating profit surpasses the market consensus of 173.2 billion won. Kim Seon-mi, a researcher at Shinhan Investment & Securities, stated that the company’s first-half overseas orders have already exceeded the annual target of 2.3 trillion won, thanks to its focus on key areas such as Iraq and Nigeria. The researcher also expects additional orders in the second half, as discussions on bidding for fertilizer in Menistan progress.
Hyundai E&C and Samsung Engineering are also anticipated to report solid second-quarter results due to their overseas orders. In particular, Hyundai E&C achieved its largest-ever order by securing the US$5 billion (KRW 6.5 trillion) Saudi Amiral project in the second quarter, surpassing its overseas order target of 10.5 trillion won for the year. Hyundai Motor Securities projects that Hyundai E&C’s second-quarter sales and consolidated operating profit will increase by 11.9% and 5.4% year-on-year, reaching KRW 6,245.5 billion and KRW 184.4 billion, respectively.
Meanwhile, Samsung Engineering stands out for its active promotion of green hydrogen projects abroad. Hi Investment & Securities expects the company’s sales to rise by 7.8% to KRW 2.7 trillion in the second quarter, with operating profit increasing by 33.5% to KRW 204.9 billion, slightly beating market expectations. Bae Se-ho, a researcher, emphasized the potential of the green hydrogen market, highlighting ongoing projects such as the H2biscus hydrogen project in Sarawak, Malaysia, and the acquisition of a green hydrogen business license in Duqm, Oman.
Overall, for the construction industry, there is a glimmer of hope on the horizon. However, it remains essential to rebuild public trust by ensuring the safe and reliable construction of future projects.
Reporter Kim So-yeon, Money Today | 2023.07.15 07:31
(Incheon = News 1) Reporter Jeong Jin-wook = GS E&C announced that he would ‘feel responsible’ for the collapse of an apartment underground parking lot in Geomdan New Town, Incheon, which occurred in April, and announced that the reconstruction all of the 1,666 households completely. The photo shows the flat that GS E&C announced would be rebuilt./News 1 Copyright (C) News 1. All rights reserved. Unauthorized copying and redistribution is prohibited. ‘Soonsalzai’, ‘Xi Water Park’, and ‘Xi Immersion’. These are disgraceful names given to GS E&C. The recent collapse of an apartment parking lot in Geomdan New Town, Incheon has destroyed trust in construction companies. In the stock market, investor sentiment for construction stocks as a whole froze.
Securities industry experts advise differential coverage. As each company’s core business is different, it is argued that we should pay attention to the real building stock hidden in the GS E&C scandal.
On the 14th, GS Construction recorded 14,170 won, down 80 won (0.56%). After the recent collapse of the Geomdan car park, the stock price continued to fall, falling 24% this month.
On the other hand, despite being the same construction stocks, Daewoo E&C, Hyundai E&C, and Samsung Engineering rose about 1%. The construction sector index also ended slightly stronger thanks to these factors.
Immediately after the Incheon Geomdan apartment accident, built by GS E&C, the dark clouds over the entire construction industry are slowly clearing. In particular, companies focusing on overseas plants and civil engineering projects instead of the domestic housing market and sluggish apartment sales are improving their stock prices as their strong performance is highlighted.
Daewoo Construction Euljiro, Jung-gu, Seoul Daewoo Construction is a representative place. Daewoo E&C is expected to post a surprise performance in the second quarter based on overseas orders. Shinhan Investment & Securities expects Daewoo E&C’s second-quarter sales profit and operating profit to increase 24% and 140% year-on-year to KRW 3.281 trillion and KRW 207.7 billion, respectively. It is a surprising performance that exceeds the market consensus (173.2 billion won) in operating profit. Kim Seon-mi, a researcher at Shinhan Investment & Securities, said, “By focusing on key areas and types of construction such as Iraq and Nigeria, overseas orders in the first half of the year exceeded the annual target by reaching 2.3 trillion won.” As we promote and discuss bidding for fertilizer in Menistan, additional orders are expected in the second half of the year.”
Hyundai E&C and Samsung Engineering are also expected to post solid 2Q results based on overseas orders.
Hyundai E&C achieved its largest ever order by winning the US$5 billion (KRW 6.5 trillion) Saudi Amiral project in the second quarter. With this contract, Hyundai E&C succeeded in surpassing its overseas order target of 10.5 trillion won this year. Hyundai Motor Securities predicts Hyundai E&C’s second-quarter sales and consolidated operating profit to increase 11.9% and 5.4% year-on-year to KRW 6,245.5 billion and KRW 184.4 billion, respectively, meeting market expectations .
In the case of Samsung Engineering, the point is that it is actively promoting green hydrogen projects abroad. Hi Investment & Securities expected sales to increase 7.8% to KRW 2.7 trillion in the second quarter and operating profit to increase 33.5% to KRW 204.9 billion. Slightly beating the market consensus.
Bae Se-ho, a researcher, said, “At the stage where the green hydrogen market is blooming, the H2biscus hydrogen project in Sarawak, Malaysia is already taking shape, and we have obtained the green hydrogen business license in Duqm, Oman.” it will,” he predicted.
[저작권자 @머니투데이, 무단전재 및 재배포 금지]
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