[비즈한국] Attention is focused on whether Hyundai E&C000720, which has entered the bid for the Jangwi District 15 redevelopment project in Seoul, will set a new record for the highest annual volume of urban maintenance project orders. To date, the record for the highest annual urban maintenance order volume by a single construction company is 9.3395 trillion won, set by Hyundai E&C in 2022. If the Jangwi District 15 project is secured, Hyundai E&C will break its own record and become the first in the industry to surpass 10 trillion won in annual urban maintenance orders. These aggressive order results are expected to lead to future revenue growth.
According to the maintenance industry, the union for the Jangwi District 15 redevelopment project in Seongbuk-gu, Seoul, will hold a general meeting on the 29th to select a contractor and put the motion to select Hyundai E&C to a vote. Previously, the bidding process for the contractor for Jangwi District 15 fell through in June and August, and again on the 27th of last month, as Hyundai E&C was the sole bidder. The union decided to switch to a private contract method and selected Hyundai E&C as the preferred bidder. Under the Urban and Residential Environment Maintenance Act, if a contractor bidding process fails twice or more, the union may select a contractor through a private contract.
The Jangwi District 15 redevelopment project is a massive undertaking. It involves upgrading aging residential areas around 233-42, Jangwi-dong, Seongbuk-gu, Seoul, to construct 37 apartment buildings (3,317 units) ranging from 5 floors underground to 35 floors above ground. The project is highly regarded for its profitability, as it will create a large-scale complex near Sangwolgok Station on Subway Line 6. It is the largest project in the Jangwi New Town, with an estimated construction cost reaching 1.4662 trillion won.
If Hyundai E&C wins the Jangwi District 15 project, it will break its record for the highest annual urban maintenance order volume. Hyundai E&C's cumulative order volume for urban maintenance projects this year stands at 9.0445 trillion won. The previous record for the highest annual volume by a single builder was 9.3395 trillion won, achieved by Hyundai E&C in 2022. Hyundai E&C is wrapping up its urban maintenance project bidding schedule for the year with Jangwi District 15, and if secured, the total order volume will increase to approximately 10.5105 trillion won. This would mark the first time a single construction company has surpassed the 10 trillion won threshold in annual orders.
Hyundai E&C has won 10 urban maintenance projects this year. These include: in March, Busan Yeonsan District 5 reconstruction (765.7 billion won) and Suwon Guun District 1 reconstruction (312.3 billion won); in April, Seoul Jangwi District 9 redevelopment (350.2 billion won); in May, Seoul Gaepo Jugong Complex 6 & 7 reconstruction (1.5138 trillion won); in June, Seoul Myeonmok District 7 redevelopment (292 billion won), Guri Sutaek-dong redevelopment (1.9648 trillion won), and Seoul Mia District 9-2 reconstruction (337 billion won); in September, Seoul Apgujeong District 2 reconstruction (2.7489 trillion won) and Jeonju Jeolla Middle School area redevelopment (403.2 billion won); and in October, Busan Sajik District 5 redevelopment (356.7 billion won).
The largest urban maintenance project in terms of order volume this year was Apgujeong District 2. Following its trademark application for the Apgujeong Hyundai Apartment complex name in March, Hyundai E&C expanded its existing Apgujeong reconstruction task force (TF) into the "Apgujeong Sales Team" to continue its pursuit of the project. While a fierce competition against industry leader Samsung C&T028260 was initially expected, Samsung C&T withdrew after protesting the union's bidding guidelines, clearing the way for Hyundai E&C’s sole bid and private contract.
Hyundai E&C's order backlog is on an upward trend. As of the end of September, the backlog stood at 68.866 trillion won, an increase of approximately 7.9609 trillion won (13%) compared to the end of last year. An order backlog represents the amount of contracted work for products or services that have not yet been delivered and is typically recognized as the company's future revenue. Currently, 53% (36.6463 trillion won) of Hyundai E&C’s backlog consists of domestic housing projects. Once the urban maintenance projects secured this year move onto track with the signing of formal contracts, they are expected to further impact the company's order backlog and operating performance.
Operating performance is also showing signs of recovery. While Hyundai E&C's cumulative consolidated revenue for the third quarter of this year was 23.0028 trillion won, down about 10% from the same period last year, operating profit rose about 4% to 534.2 billion won. The cumulative cost-to-revenue ratio up to the third quarter of this year was 94%, a decrease of about 1.2% compared to the same period last year, indicating improved profitability. Last year, Hyundai E&C posted a consolidated operating loss of 1.2209 trillion won due to rising raw material costs, high exchange rates, and losses from overseas projects managed by its subsidiary, Hyundai Engineering.
A Hyundai E&C official stated, "Our expertise, proven by our successful track record in core areas of Seoul, seems to have been the decisive factor in gaining the trust of the union members," adding, "We plan to consistently maintain our market dominance through differentiated strategies for each site and our company's unique specialized products."