Speed of Reconstruction to Accelerate
The author is an analyst of NH Investment & Securities. He can be reached at minjae.lee@nhqv.com. -- Ed.
With the pace of reconstruction projects largely depending on government policies, we expect the number of apartments available for reconstruction to climb by more than 15% pa on average through 2030, with the speed of reconstruction accelerating overall.
Reconstruction work should continue to prove advantageous for large construction firms, as it typically involves relatively low pre-sale risk, stable profitability, and a focus on brand apartments.
At the same time, backed by abundant cash flow, large constructors are actively expanding into new business arenas. IS Dongseo and SK E&C are already branching into the waste/water treatment and fuel cell businesses, with a focus on eco-friendliness and stable profit generation.
Hyundai E&C is set for an active foray into new businesses such as offshore wind power, helped by the utilization of synergies between its main business (construction) and subsidiaries.
We have published a report to shine new light on the construction industry, which has struggled in terms of valuation expansion thus far amid a focus on the domestic housing and overseas plant domains—both of which possess clear limitations due to their high exposure to economic fluctuations.