DL E&C Sees Profitability and Financial Stability Rise in First Half, Drawing Attention from Securities Industry

First-Half Operating Profit Reaches 316.8 Billion Won
Profitability Gains Draw Attention from Securities Industry
Clear Improvement in Housing Division Profitability
Stable Trends in Civil Engineering and Plant Divisions

DL E&C has drawn significant attention in the securities industry this year due to a marked improvement in profitability in the first half of the year. As profitability has improved, particularly in the housing business, leading securities firms are highlighting DL E&C's strengthened earnings power and stable financial structure as key competitive advantages. There is also ongoing interest in the company’s potential for expanded orders in the plant and data center divisions, as well as in future growth businesses such as small modular reactors (SMRs).

According to the Financial Supervisory Service's electronic disclosure system on August 27, DL E&C reported consolidated revenue of 3.5281 trillion won and operating profit of 316.8 billion won in the first half of this year. Operating profit increased by 53% year-on-year. Following a 94.3% year-on-year increase in operating profit in the first quarter, the company continued this profitability growth trend in the second quarter as well, recording operating profit of 159.4 billion won, up 26.3% from the same period last year.

The chemical reaction device called the 'Loop Reactor' installed at the Golden Triangle Polymers Project (GTPP) site, which DL E&C is carrying out in Texas, USA. DL E&C

Securities Industry: “Profitability Continues to Exceed Expectations”

The securities industry has positively evaluated the profitability improvement emerging from DL E&C’s housing business. Samsung Securities analyzed that DL E&C’s second-quarter operating profit exceeded market consensus by 28.8%, attributing the strong results to improved profitability across major business units including housing, civil engineering, and plants. Hyundai Motor Securities also reported that profitability is rising in the housing sector and is recovering to normal levels in the civil engineering and plant sectors.

LS Securities assessed that the high-margin trend in the housing division was the main driver behind DL E&C's strong second-quarter results. The company has maintained high profitability above 20% in the housing division for consecutive quarters, and profitability in the plant division also remained strong with minimal impact from one-off factors, which was positively highlighted.

1.2 Trillion Won in Net Cash and 86.4% Debt Ratio: Financial Stability on the Rise

The securities industry also cites DL E&C’s solid financial structure as a unique strength. As of the end of the second quarter this year, DL E&C reported net cash of about 1.2 trillion won and a debt ratio of 86.4%. In particular, after the demerger in 2021, the company has generated positive operating cash flow every year, demonstrating a stable cash-generating ability.

IBK Investment & Securities highlighted DL E&C's stable financial structure and shareholder returns as key investment factors. Net cash increased by 105.2 billion won compared to the end of last year, and with a debt ratio at 86.4%, the company’s financial stability was viewed positively.

Shinhan Investment & Securities also named strong business results, net cash exceeding 1 trillion won, and expectations of expanded shareholder returns as DL E&C’s relative strengths. The firm assessed that, particularly amid growing market volatility, these factors provide strong defense.

Stable cash generation has also translated into shareholder returns. Last month, DL E&C entered into a trust contract to acquire treasury stock worth 55.5 billion won. This is part of a shareholder return policy for the three-year period from 2024 to 2026, whereby the company is implementing a policy of paying 10% of consolidated net profit as cash dividends and purchasing 15% of treasury shares. IBK Investment & Securities reiterated the company’s stable financial structure and shareholder returns as major investment points.

Expectations for Plant and Data Center Orders: SMR Growth Potential Also in Focus

The securities industry is also focusing on DL E&C’s growth prospects through potential increases in new orders for plants and data centers.

In the first half of this year, DL E&C’s new consolidated orders totaled 5.2446 trillion won. According to IBK Investment & Securities, new orders in the first half increased by 110.7% year-on-year, while the order backlog expanded to 28.9 trillion won. In the second half, the company is pursuing plant orders worth approximately 2.5 trillion won both domestically and abroad, along with data center orders of about 2 trillion won. The plant order pipeline is also estimated to reach approximately 10 trillion won.

IBK Investment & Securities forecasts that the recovery in housing profitability, combined with expanded orders for plants and data centers, will bolster DL E&C’s sales base from 2027 onwards. Samsung Securities has also identified data centers and domestic and international plants as the main order pipelines for the second half, highlighting the momentum for future contract wins.

Progress in the SMR sector is also being viewed positively. Hyundai Motor Securities noted that the standard design project for SMRs, which is being jointly developed by DL E&C and global SMR developer X-energy, is proceeding smoothly. The firm also analyzed that other SMR developers are requesting to participate in standard design projects as well.

DL E&C is collaborating with X-energy to establish a ‘standardized SMR design’ contract, aiming to enter the fourth-generation SMR market. In the data center sector, its subsidiary DL Construction secured an artificial intelligence (AI) data center project in Bucheon, worth 126.8 billion won in the first half, while DL E&C itself is expanding business opportunities by focusing on large-scale projects in the Seoul metropolitan area and the Chungcheong region.

A DL E&C representative stated, “DL E&C demonstrates differentiated competitiveness based on industry-leading profitability and financial stability,” and added, “On the back of robust financial strength, we will selectively pursue high-quality projects to further enhance profitability, while also accelerating performance in future growth areas such as plants, SMRs, and data centers, thereby solidifying a sustainable foundation for growth.”

This content was produced with the assistance of AI translation services.