Research Al-eum Says HL D&I to Benefit from Semiconductor and AI Power Grid Investment, Sets Target Price at 4,170 Won

[Financial News] Research Al-eum said on the 26th that HL D&I Halla Corporation is expected to see profitability improve rapidly as it reduces low-margin sites, while power infrastructure investment driven by the expansion of semiconductor fabrication plants and AI data centers will become a new order-winning catalyst. It set a fair value target price of 4,170 won, implying 66.8% upside from the previous day's closing price of 2,500 won.
Research Al-eum analyst Kim Do-yoon said, "HL D&I is adding a new growth engine in power infrastructure to the normalization of profitability in its housing business."
HL D&I's operating margin rose from 3.2% in 2023 to 3.7% in 2024 and 4.6% last year, then improved further to 4.9% in the first quarter and 6.0% in the second quarter of this year. The gains were driven by a lower share of low-margin projects and the full-scale recognition of revenue from high-margin projects that share development profits.
Its in-house development projects are also expected to support earnings improvement. Both the Icheon Ami District 1 and Ulsan Taehwagang Riverside projects have completed sales. Because in-house projects secure both construction and development profits, their contribution to earnings is expected to expand as work progresses.
At the end of the second quarter, its order backlog stood at 5.8345 trillion won, securing about three years' worth of work. The sales rate at projects under way also reached 87%. New orders in the first half declined, but Research Al-eum said this reflected a selective order strategy focused on cost and profitability. In fact, the company disclosed supply contracts worth 833.4 billion won in July alone.
The new point to watch is power infrastructure. Analyst Kim explained, "HL D&I carried out construction of a new 345kV substation at Samsung Electronics Pyeongtaek Campus and has also secured an order backlog of 320.8 billion won in KEPCO's power tunnel projects."
Semiconductor fabrication plants and AI data centers require large-scale power supply networks. If related investment expands in the future, orders for surrounding infrastructure such as substations and power tunnels are also likely to rise. Another competitive advantage is that only a limited number of companies meet the requirements of large corporate clients while also having relevant construction experience.
An expanding social overhead capital (SOC) market is also favorable for the order environment. This year's SOC budget is 21.1 trillion won, up from 19.5 trillion won last year, and the government plans to expand the scale of new private investment projects it identifies over the next five years from 70 trillion won to 100 trillion won.
Meanwhile, Research Al-eum forecast that HL D&I's consolidated revenue this year will rise 4.8% from a year earlier to 1.83 trillion won, while operating profit will increase 22.4% to 97.6 billion won. The target price of 4,170 won was derived by applying a target price-to-book ratio of 0.3 times to the 2027 estimated book value per share of 13,902 won.
Kim added, "The company is undergoing a structural improvement through selective orders centered on profitability and a reduced share of low-margin businesses," and "It is also worth noting that expectations for benefits from power grid investment tied to the expansion of AI infrastructure could rise."


[email protected] Kim Kyung-a Reporter