By Kwanwoo Jun
GS Engineering & Construction’s shares slumped Thursday after news of its costly plan to rebuild an apartment complex in South Korea following the collapse of a parking lot under construction there.
Shares of the South Korean builder fell as much as 17% to 14,910 won ($11.43) in early afternoon trade. The stock benchmark Kospi was last down 0.3%.
GS E&C said Wednesday it would demolish and rebuild a half-built complex a town west of Seoul and create 1,666 housing units. This comes after the upper concrete slab of an underground parking lot there caved in due to poor construction in April.
The planned reconstruction could cost GS E&C KRW540 billion ($414.1 million), which could rise further depending on losses and compensations for the delayed project, Hi Investment & Securities analyst Bae Se-ho said in a research note Thursday.
Samsung Securities analyst Baek Jae-seung said in a note Thursday that he expects GS E&C to set aside a huge amount of provisions, which should pressure earnings for the second and third quarters of this year.
Baek lowered his 2023 operating-profit forecast for GS E&C by 39% and cut the stock’s target price by 27% to KRW22,000.
Write to Kwanwoo Jun at [email protected]
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