发帖
雷达卡
Korean Construction
We downgrade our sector view to neutral from positive
South Korea
Construction
Paul RheeAC
(82-2) 758-5729
paul.b.rhee@jpmorgan.com
J.P. Morgan Securities (Far East) Limited
See page 34 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
Korean Construction Index
Index
100
150
200
250
300
350
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Source: Datastream
• We downgrade our sector view from positive to neutral, cut our
ratings on five of the six E&Cs under our coverage, and change our
price target for one stock: Construction has been one of the best
performers YTD and since the Oct 2008 trough. With valuations now at
what we believe to be more reasonable levels and EPS reacceleration
unlikely for some names until 2010, the group looks susceptible to
profit-taking pressure unless we see surprising earnings momentum.
• The group is still under-owned by institutional investors, and we see
no catalysts that would derail the current momentum, as news flow is
likely to remain positive in the short term and strong market liquidity
could continue to trump fundamentals. But if our earnings and industry
analysis proves right, we would look to take profit on any further
outperformance.
• Due to the recession and extended housing slump we believe a
negative shift in mix toward lower-margin infrastructure and
overseas projects will put pressure on margins and EPS growth: For
most companies in our E&C universe, housing was the largest and
highest-margin segment prior to the downturn. Going forward, we expect
housing as a percentage of sales and orders to fall in the medium to long
term.
• On a relative basis, Hyundai Development is our top pick in the
sector, and would look to accumulate the stock on sharp pullbacks or
oversold conditions: We believe that the company offers superior
earnings visibility compared to its peers due to mix improvement, and
that it has the highest quality book. We are now Underweight on both
Hyundai E&C and Samsung Engineering, the former due to valuations,
and the latter due to its recent exceptional performance.
京公网安备 11010802022788号
