[위클리크레딧]HDC Hyunsan overcame rating downgrade crisis

[이데일리 마켓in 안혜신 기자] In the credit market this week HDC Hyundai Development Company (294870)This credit rating downgrade risk was avoided. Paradise (034230)has an upgraded rating outlook.

Ki-pyeong Han lifts HDC Hyundai Development Company’s ‘negative review’

Korea Ratings lifted the ‘negative review’ of HDC Hyundai Development Company’s non-guaranteed bonds and maintained the credit rating of ‘A’ and the previous outlook of ‘negative’. In January of last year, it was registered as a subject of negative review due to the Gwangju Hwajeong accident, and then it was lifted.

Senior researcher Kim Hyeon Ki-pyeong Han evaluated, “Considering the performance of HDC Hyundai Development Company’s orders, sales, and occupancy, it is judged that business risks related to safety accidents have been significantly reduced compared to immediately after the accident.”

Immediately after the accident, risks related to winning orders such as deteriorating brand awareness, consequent exclusion from construction or demand for contract termination increased. In fact, the order backlog of HDC Hyundai Development Company was 30.5 trillion won as of the end of March, down from 33.6 trillion won at the end of 2021, right before the accident.

HDC Hyunsan, ‘Smart Apartment’ Cheongju Gagyeong I-Park Complex 5

Researcher Kim said, “I think there is also an impact on the selective order strategy, such as cancellation of contracts following a feasibility review,” adding, “However, considering the fact that the order backlog continued to grow until the accident occurred, the accident reduced the competitiveness of winning orders centered on the housing business.” Analyzed.

However, with a balance turnover rate of about 10x, the company is securing a solid sales base in absolute terms. Also, as of the end of March, the pre-sale rate for ongoing projects was 97.6%, and the occupancy rate was 94.9%, which is excellent.

Despite the reflection of expenses related to the Gwangju Hwajeong accident and the need for loans to developers and associations related to working capital and real estate project financing (PF) response to Ubaraemu, the consolidated debt ratio at the end of March was 139.5% and the debt dependence was 33.3%. On an absolute level, the company maintains a sound financial structure.

Researcher Kim said, “The widespread and immediate business risk impact caused by the occurrence of safety accidents has been significantly mitigated.” After the reputation deteriorated, continuous and long-term monitoring was needed for new order trends, etc., so we lifted it from the ‘rating monitoring target’ and gave it a ‘negative’ rating outlook.”

As a result, HDC Hyundai Development Company is now free from the risk of a credit rating downgrade. However, it is still too early to say that the credit rating has completely escaped the risk of a credit rating downgrade, as the three credit rating agencies are still giving a rating outlook of ‘negative’.

S-Oil, profit expansion due to high oil prices… Rating Outlook ‘Positive’

On the other hand, S-Oil (S-Oil(010950)) was upgraded from ‘stable’ to ‘positive’ by the Korea Investors Service and NICE Investors Service. The credit rating was maintained at ‘AA’.

Hanshinpyeong and Nashinpyeong cited high oil prices, increased profits thanks to improved supply and demand conditions, and reduced financial burden through operating cash flow as major factors for the upward revision of the rating outlook.

After an operating loss stemming from the COVID-19 crisis in 2020, operating performance has improved since 2021 thanks to a sharp rise in oil prices, a recovery in refining margins, and favorable supply and demand conditions in the lubrication sector. In particular, in the first half of last year, it realized a large-scale operating profit of 3.4 trillion won due to a surge in oil prices and refining margins after the Ukrainian crisis.

Since the second half of last year, the normalization of supply and demand in the oil refining industry and concerns over a slowdown in demand for petroleum products due to global economic uncertainty have led to a decline in profit. Jang Soo-myeong, senior researcher at Hanshin Pyeong, said, “In the future, earnings volatility is expected in connection with the global economic situation and major external variables.” Considering the business and financial linkages with Aramco and the competitiveness of the lubrication sector, the trend of generating relatively good profits is expected to be maintained.”

Shin Ho-yong Na, senior researcher Shin-pyeong Shin, also said, “Business performance has improved significantly under a favorable supply and demand environment, and it will be possible to maintain a good level of operating profitability in the future.” Analyzed.