KOSPIConstruction & Materials375500

DL E&C

₩75,800▼ 0.26%2026-10-02 close

Market Cap

₩2.9T

Turnover

₩17.7B

Volume

240,000 shares

Shares out.

38.7M

PER

5.0×

PBR

0.5×

EPS

₩14,773

Dividend Yield

1.21%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩890 per share · Prices as of the 2026-10-02 close

Report overview

Profits Recovering, Order Intake on Trial

DL E&C has improved operating and net profit even as revenue shrank, thanks to stabilized housing cost ratios, but a gap in plant orders and the achievement of its annual order target remain the key issues for its medium-term earnings.

1
For 2025, consolidated revenue was KRW 7.4024tn, down from KRW 8.3184tn in 2024, yet operating profit rose to KRW 387.0bn and the operating margin improved from 3.3% to 5.2%.
2
Operating profit was KRW 157.4bn in 1Q26 and KRW 159.4bn in 2Q26, two straight quarters above the KRW 150bn mark, with the company citing stabilized housing cost ratios.
3
The debt-to-equity ratio fell from 100.4% in 2024 to 84.4% in 2025, and the company said it held about KRW 1.2tn in net cash at end-2Q26 while maintaining an 'AA- (stable)' bond rating.
4
First-half new orders rose 110.7% year on year to KRW 5.2446tn but reached only about 42% of the KRW 12.5tn annual target, making second-half redevelopment, data center and power orders pivotal.
5
On shareholder returns, under a policy of paying out 10% of consolidated net profit in cash dividends and buying back 15% in treasury shares, a KRW 55.5bn buyback trust contract was signed in July 2026.

Business structure

DL E&C is a diversified contractor relisted in 2021 after the construction division of Daelim Industrial was spun off; it operates housing, civil works, plant, and power/environment businesses alongside its wholly owned subsidiary DL Construction.

The housing arm centers on presales and urban redevelopment under the 'e-Pyeonhansesang' and high-end brands, while the plant arm is an EPC franchise strong in engineering and procurement for petrochemicals, refining and ammonia.

The business mix has shifted materially in recent years: on a cumulative basis through 3Q25, housing accounted for 52.2% of revenue while plant expanded to 34.4%.

At DL Construction, revenue shrank 33.1% from KRW 2.4692tn in 2024 to KRW 1.6526tn in 2025, and its order backlog fell from around KRW 6.4tn at end-2024 to about KRW 4.65tn at end-2025.

Management explicitly maintains a selective order-taking stance that prioritizes profitability over top-line scale, and attributes the earnings improvement to stabilized housing cost ratios plus selective bidding and cost control.

New growth pillars are small modular reactors and data centers: the company invested USD 20mn in U.S. SMR developer X-energy in 2023 for roughly a 2% stake, a move seen as strategic rather than purely financial given potential engineering, procurement and construction cooperation.

In March 2026 it became the first Korean builder to win a paid SMR standardized design contract from X-energy, worth USD 10mn, moving beyond equity investment into actual project execution.

Competitively, it goes head to head with other large contractors for Seoul redevelopment projects and domestic power and data center awards, and a media tally of first-half 2026 public-works awards placed it first with KRW 903.2bn.

Earnings trend

Quarterly revenue · Operating profit

₩2T₩126.2B25Q2₩1.9T₩116.8B25Q3₩1.7T₩63B25Q4₩1.7T₩157.4B26Q1₩1.8T₩159.4B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩7.5T₩497B2022₩8T₩330.7B2023₩8.3T₩270.9B2024₩7.4T₩387B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩2T	₩126.2B	6.3%
2025Q3	₩1.9T	₩116.8B	6.1%
2025Q4	₩1.7T	₩63B	3.7%
2026Q1	₩1.7T	₩157.4B	9.1%
2026Q2	₩1.8T	₩159.4B	8.8%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩7.5T	₩497B	₩413.2B	6.6%	9.5%	91.3%
2023	₩8T	₩330.7B	₩187.9B	4.1%	3.9%	95.9%
2024	₩8.3T	₩270.9B	₩229.2B	3.3%	4.7%	100.4%
2025	₩7.4T	₩387B	₩370.2B	5.2%	7.1%	84.4%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On an annual basis, revenue rose from KRW 7.4968tn in 2022 to KRW 7.9911tn in 2023 and KRW 8.3184tn in 2024 before falling to KRW 7.4024tn in 2025, while operating profit increased from KRW 270.9bn in 2024 to KRW 387.0bn in 2025.

The operating margin slid from 6.6% in 2022 to 3.3% in 2024 and then recovered to 5.2% in 2025, a classic selective-bidding trajectory in which margins improve as the top line contracts.

Net profit attributable to owners also rose from KRW 229.2bn in 2024 to KRW 370.2bn in 2025, and operating cash flow expanded to KRW 232.1bn in 2025 from KRW 187.9bn in 2024.

On the balance sheet, equity stood at KRW 5.2441tn against liabilities of KRW 4.4252tn, lowering the debt-to-equity ratio from 100.4% in 2024 to 84.4% in 2025.

Quarterly data show sizeable swings below the operating line: in 2Q25 operating profit of KRW 126.2bn translated into only KRW 8.3bn of net profit to owners, whereas in 4Q25 operating profit fell to KRW 63.0bn yet net profit jumped to KRW 205.3bn.

Into 2026, 1Q revenue was KRW 1.7252tn with operating profit of KRW 157.4bn, and 2Q revenue KRW 1.8029tn with operating profit of KRW 159.4bn, so revenue declined versus the same quarters of 2025 while profits grew.

The company reported second-quarter revenue down 9.47% year on year with operating profit up 26.32%, and first-half revenue down 7.14% with operating profit up 52.91%. Media reports put the housing gross profit margin at 23.3% in the second quarter, while also noting that one-off items were embedded in that figure.

Summing the latest four quarters (3Q25 through 2Q26) gives roughly KRW 7.1310tn of revenue and about KRW 496.6bn of operating profit, an operating margin near 7%, and KRW 621.5bn of net profit to owners, though that includes non-operating items such as a KRW 25.0bn valuation gain in the second quarter from X-energy's Nasdaq listing.

Industry analysis

Korea's construction sector sits in a phase where indicators are recovering at very different speeds after years of weak starts and permits.

According to the Ministry of Land, Infrastructure and Transport's June 2026 housing statistics, first-half apartment presales rose 60.7% year on year to 109,186 units and housing starts rose 14.4% to 118,005 units, while permits fell 15.8% to 116,611 units.

At a June 2026 seminar, the Construction and Economy Research Institute of Korea forecast domestic construction orders of KRW 240.8tn this year, up 8.9%, construction investment of KRW 266.1tn, up 0.3%, and a 2.5% rise in nationwide home prices.

Rising construction costs, tighter project-financing screening and accumulated unsold units in the provinces were cited as delaying starts, with public and civil works cushioning the downside while recovery for private non-residential work and regional players stays limited.

In cycle terms, presales and starts appear past their trough, but shrinking permits could constrain volume two to three years out, so contractor earnings remain driven more by cost ratios than by volume for now.

DL E&C's relative position stands out on balance-sheet strength and margin defense: the company cited roughly KRW 1.2tn of net cash and an 86.4% debt-to-equity ratio at end-2Q26, along with an 'AA- (stable)' bond rating and an 'A1' commercial paper rating.

In the plant segment, however, the backlog fell to KRW 2.7625tn at end-3Q25 from KRW 4.7249tn at end-2024, a concern given that plant work accounted for 34.5% of cumulative third-quarter revenue.

Analysts have framed a recovery in plant orders as the key variable for earnings stability, arguing that growth strengthens only if order recovery and high profitability are sustained together.

Outlook

Management's 2026 targets are KRW 12.5tn of new orders and KRW 7.2tn of revenue, including a KRW 3tn plant order goal built around a pipeline of domestic and overseas ammonia and power plants. Progress is uneven by segment.

First-half consolidated new orders reached KRW 5.2446tn, up 110.7% year on year, with backlog at KRW 28.9tn, but that covered only about 42% of the annual target, with plant (KRW 713.3bn, or 24% of target) and DL Construction (KRW 500.2bn, 25%) far behind, implying more than KRW 7tn must be won in the second half.

In housing and redevelopment, the company said urban redevelopment awards including Hannam District 5 were booked and it secured the contractor rights for the Mokdong Complex 6 reconstruction, and it plans to pursue core Seoul redevelopment projects such as Seongsu District 2 in the second half.

Seongsu District 2 was reported to have narrowed to a two-way contest with HDC Hyundai Development after a July site briefing.

Outside housing, it won the KRW 550bn East Jeju combined-cycle power project in June 2026 and is pursuing power infrastructure work such as combined-cycle and pumped-storage plants, and after DL Construction won a KRW 126.8bn AI data center in Bucheon in the first half, the company said it expects data center awards in the Chungcheong and Seoul metropolitan regions in the second half.

In nuclear, the plan is to complete X-energy's standardized design by the first half of 2027 and apply it to the first unit slated for 2030 operation and subsequent projects, and reports say the company aims to obtain ASME N-Stamp nuclear equipment certification by year-end.

That said, completions of large plants such as S-Oil's Shaheen and Golden Triangle Polymers in the United States mean revenue recognition tapers after handover, which remains a drag on the top line beyond the second half.

Valuation

PER

5.0×

PBR

0.5×

ROE

11.9%

EPS

₩14,773

BPS

₩142,120

Dividend per share

₩890

The shares trade well below their book value per share, and profit-based multiples also sit at the lower end among large Korean contractors. Over several years, margins that eroded through 2024 recovered in 2025 and the first half of 2026, which mechanically pulled earnings-based multiples down.

Hanwha Investment & Securities said in a report dated July 31, 2026 that it maintained a Buy rating and a KRW 110,000 target price, viewing positively the KRW 55.5bn buyback decision premised on cancellation while the stock sat near the bottom of its valuation band. There is a view in the opposite direction as well.

SR Times reported in August 2026 that Hana Securities, while noting second-quarter operating profit beat consensus by 29%, cut its target price 33.3% from KRW 120,000 to KRW 80,000, describing it as an adjustment reflecting a broad de-rating across the construction sector, and expected follow-on awards from the X-energy standardized design to become visible in earnings only in 2027.

Dividends are tied to a policy of paying 10% of consolidated net profit in cash and buying back 15% in treasury shares, so a profit recovery mechanically expands returns, though because net profit contains non-operating swings, the stability of that funding should be judged alongside the quality of quarterly earnings.

Ultimately, the question is less about the level of the multiple than whether new plant and data center orders can refill a shrinking backlog and sustain earnings.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Margins improved even as revenue declined

The operating margin recovered from 3.3% in 2024 to 5.2% in 2025, and operating profit stepped up to KRW 157.4bn in 1Q26 and KRW 159.4bn in 2Q26. The combined operating margin for the latest four quarters is around 7%, with absolute profit larger than in 2024 when revenue exceeded KRW 8tn.

TheBell reported that the cost ratio improved from 88.5% in 2024 to around 88% in 2025, driving profitability. In a phase where cost ratios rather than volume determine earnings, the selective-bidding stance is showing up in the numbers, which is the starting point of the bull case.

Financial headroom from net cash and credit ratings

The debt-to-equity ratio fell from 100.4% in 2024 to 84.4% in 2025, with equity of KRW 5.2441tn.

The company reported roughly KRW 1.2tn of net cash and an 86.4% debt-to-equity ratio at end-2Q26, noted positive operating cash flow every year since the 2021 spin-off, and cited an 'AA- stable' bond rating and an 'A1' commercial paper rating.

With project-financing screening tightened industry-wide, funding capacity is a defensive asset in selective bidding and redevelopment contests.

IBK Securities highlighted the balance sheet and shareholder returns as investment points, and Shinhan Securities also cited over KRW 1tn of net cash and expectations of expanded shareholder returns as relative strengths.

Order diversification into redevelopment, data centers and SMRs

Second-quarter 2026 new orders rose 223.9% year on year as urban redevelopment awards including Hannam District 5 were booked. Outside housing, the company is broadening into power, energy and data centers, having won the KRW 550bn East Jeju combined-cycle project while pursuing combined-cycle and pumped-storage work.

On the nuclear front, it has expanded its dedicated SMR team to 80 people with about 30 assigned to standardized design, and the completed design is intended to apply to X-energy's global projects starting with the 2030 first unit. The bull argument is that efforts to reduce housing concentration are beginning to appear in actual contracts.

Bear factors

Shrinking top line and a smaller plant backlog

Revenue fell from KRW 8.3184tn in 2024 to KRW 7.4024tn in 2025, and both 1Q26 and 2Q26 revenue came in below the same quarters of 2025. The plant backlog dropped to KRW 2.7625tn at end-3Q25 from KRW 4.7249tn at end-2024.

With large plants such as S-Oil's Shaheen and Golden Triangle Polymers in the United States set for completion, revenue recognition that clusters around handover tapers off. Even with better margins, a continuously shrinking revenue base can make it hard to hold absolute profit levels.

Pressure to meet the annual order target

Cumulative first-half new orders of KRW 5.2446tn covered only about 42% of the KRW 12.5tn annual target, with housing (target KRW 5.7tn), DL Construction and plant all below half of their goals, implying more than KRW 7tn must be secured in the second half.

There is precedent: at the 3Q25 investor briefing, the annual order guidance was cut 26.5% from KRW 13.2tn to KRW 9.7tn, with revenue and operating profit targets lowered as well. The more target attainment depends on a few large second-half awards, the more individual bid outcomes can swing earnings expectations.

Earnings quality and one-off items

Quarterly net profit swings widely: 2Q25 showed KRW 126.2bn of operating profit but only KRW 8.3bn of net profit to owners, while 4Q25 had KRW 63.0bn of operating profit and KRW 205.3bn of net profit.

Reports note that the 23.3% housing gross margin in 2Q26 included one-off items, and the KRW 25.0bn valuation gain on the X-energy stake is a non-operating item. Carbon-capture subsidiary CARBONCO was reported to have had its full KRW 45.3bn book value written down in the 2025 annual report. This is a period in which operating performance and accounting profit need to be read separately.

Risk factors

Policy and regulatory risk

With demand-suppression measures and supply packages alternating, presale schedules and project economics can shift with policy.

The Construction and Economy Research Institute of Korea expects a genuine recovery in construction activity to take time given successive housing demand curbs, rising construction costs, and tighter safety, quality and labor regulation.

The Ministry of Employment and Labor has said it would seek license revocation and impose fines on contractors with repeated serious accidents under its comprehensive labor-safety plan. Tighter regulation raises both site operating costs and the risk of schedule delays.

Order and competition risk

Core Seoul redevelopment projects draw fierce competition among large contractors, so a loss can leave a hole in second-half order plans. Seongsu District 2, worth over KRW 2tn and flagged by the company as a second-half priority, was reported as a two-way contest with HDC Hyundai Development.

Data centers remain at the stage of the company saying it expects to secure volumes in the Chungcheong and Seoul metropolitan regions, with timing and size not yet fixed. In plant, cumulative orders through 3Q25 were just KRW 141.5bn, so repeated delays in large overseas awards cannot be ruled out.

Regional unsold inventory and subsidiary risk

The Research Institute for Construction Policy forecast that regional housing markets in 2026 are likely to decline around 1% or move sideways as population and demand bases weaken. Prolonged unsold inventory in the provinces can feed bad-debt charges and post-completion stock burdens into earnings.

At the subsidiary level, the downgrade of DL Construction's 2025 order guidance was attributed to an August fatality at an Uijeongbu site, rising civil-works cost ratios and bad-debt risk from unsold units. DL Construction's revenue also shrank 33.1% in 2025, confirming reduced workload in its core businesses.

What to watch next

Late October to early November 2026
At the third-quarter results and investor briefing, check whether housing cost ratios hold and whether the KRW 7.2tn revenue and KRW 12.5tn new-order guidance is maintained or revised. Guidance was cut at the 3Q25 briefing in a prior instance.
During the fourth quarter of 2026
The Seongsu District 2 contractor selection and any additional Seoul redevelopment wins will drive second-half order progress. With first-half intake at roughly 42% of the annual target, individual large awards feed directly into backlog trends.
4Q 2026 to 1H 2027
Watch for actual contract disclosures in Chungcheong and metropolitan data centers and in power infrastructure such as combined-cycle and pumped-storage plants, plus progress toward the KRW 3tn plant order goal. Plant backlog recovery is the gauge for how much of the post-completion revenue gap can be filled.
By December 24, 2026
Check completion of the KRW 55.5bn treasury share buyback trust and whether cancellation follows, and how the policy for 2027 onward is framed once the three-year 2024-2026 shareholder return program ends.
End-2026 to 1H 2027
Obtaining ASME N-Stamp nuclear certification, the completion schedule for X-energy's standardized design, and participation in follow-on EPC work will determine when new businesses start contributing to earnings. One brokerage expected follow-on awards to become visible in earnings only in 2027.

Overall view

DL E&C's recent results can be summed up as selling less and keeping more. Revenue fell from KRW 8.3184tn in 2024 to KRW 7.4024tn in 2025, yet operating profit rose from KRW 270.9bn to KRW 387.0bn and the operating margin recovered from 3.3% to 5.2%, with profit holding at KRW 157.4bn in 1Q26 and KRW 159.4bn in 2Q26.

The debt-to-equity ratio fell to 84.4% and the company cited roughly KRW 1.2tn of net cash at end-2Q26, indicating a balance sheet built for defense through a downcycle.

On the other side, the shrinking plant backlog and first-half order intake at only about 42% of the annual target leave a question mark over the medium-term revenue base.

The bull case rests on cost-ratio stability and diversification into redevelopment, data centers and SMRs; the bear case on the revenue gap after large plant completions and one-off items embedded in net profit, and the two carry equal weight.

Views on valuation clearly diverge, with one brokerage maintaining its target price in late July alongside a target price cut reported in August. What matters next is the third-quarter results and guidance, outcomes of large awards such as Seongsu District 2, and execution of the share cancellation. This report is for information purposes only and contains no buy or sell recommendation.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.