"Korea Land & Housing Trust Expands Urban Redevelopment Orders, Earnings Turnaround Continues" [Click e-Stock]

Hanwha Investment & Securities Maintains 'Buy' Rating

Target Price Held at 1,800 Won

On September 1, Hanwha Investment & Securities maintained its ‘Buy’ investment rating and target price of 1,800 won for Korea Land & Housing Trust, a real estate trust company. This suggests an upside potential of 53.8% compared to the closing price of 1,170 won on August 28.

Yurim Song, a researcher at Hanwha Investment & Securities, stated, “With the earnings turnaround continuing in the second half of the year, the expansion of contract wins for leveraged urban redevelopment projects is expected to be the key mid- to long-term investment point.”

Korea Land & Housing Trust posted operating revenue of 98.9 billion won and operating profit of 4.9 billion won in the first half of the year, representing increases of 28.2% year-on-year, resulting in a turnaround to profitability. In addition to the recovery of commission revenue beginning in the first quarter, approximately 8 billion won from the sale of Humax shares for development marketing was reflected in the second quarter, driving a significant rise in operating revenue.

During the same period, the company recorded a fund investment valuation loss as well as a loss on KORATE investment (around 11 billion won), yet operating profit improved. Equity method gains of 36.2 billion won were reflected in non-operating income in the first half, resulting in even greater improvement in net profit.

With new contract wins showing a clear recovery from their low point in 2024, the growth in leveraged urban redevelopment (a trust-based model where the company provides financing for redevelopment and reconstruction projects) is particularly notable.

Last year, leveraged urban redevelopment orders hit a record high of 164.9 billion won since the company entered the business, and this year, order volume is projected to exceed the previous record of over 80 billion won, reaching a robust level in the 100 billion won range.

The share of leveraged urban redevelopment in the total order backlog expanded to 57% by the end of the first half.

Hanwha Investment & Securities forecasts Korea Land & Housing Trust’s operating profit at 15 billion won this year and 34 billion won next year.

Researcher Song added, “We expect favorable contract wins to continue, supported by the future expansion of the urban redevelopment market, and the company’s business structure—which had been sensitive to the sales market—is also expected to undergo structural improvement in the medium to long term.”

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