Daelim Industry Leads Public Works Backlog Orders at 10,037 Bln Won
- Company expects construction market to turn around in 2nd half

Daelim Industrial Co. estimated that its sales last year would reach 4,259 billion won and 4,500 billion won this year. Orders backlog amounted to 9,237 billion won last year and 10,037 billion won projected this year.
The company's finance grew stronger year by year in the past five years. Its debt ratio slid to 114.5 percent in 2000 from 166.3 percent in the previous year. It further sled to 95.4 percent in 2001, to 87.6 percent in the following year. It reached 85.2 percent in 2003, then climbed up slightly in the next year to 86.2 percent. It is projected to fall to 72.2 percent this year.
The company's total debt amounted to 1,355 billion won in 1999 with long term debt taking up 53 percent at 720 billion won or 53 percent, which were cut to 798 billion won in the following year with long term debt standing at 604 billion won. Its debt totaled 553 billion won in 2001 with long-term debt taking up 375 billion won or 68 percent.The company was able to reduce its debt to 286 billion won in the following year with long-term debt comprising 60 percent at 192 billion won. It was down further to 219 billion won in 2003 with long-term debt totaling 68 billion won or 31 percent.
It was estimated that total debt was projected to increase to 390 billion won last year mainly due to hikes in long-term debt to 241 billion won or 62 percent of total debt. It is projected to be down to 305 billion won this year with long-term debt accounting for 236 billion won or 77 percent. The return on equity amounted to 2.02 percent in 2001, which shot up to 7.83 percent in the following year. It nearly doubled in 2003 with 13.89 percent, which was followed by a projection that it would hit 22.93 percent last year. It is projected to go down a bit this year to 21.04 percent. It is projected to skid to 20.68 percent next year and to 20.05 percent in 2007.
The company has been aiming at maximizing shareholder's value. In 2003, dividend yield rate recorded 3.3 percent with DPS amounting to 1,300 won per share. The pay-out ratio amounted to 22.6 percent. Average yield rate of the construction sector amounted to 3.2 percent. The company recorded net profit of 219.6 billion won in 2003.
In 2000, the company recorded net profit of 39.6 billion won with DPS amounting to 500 won per share. Dividend yield rate came to 10.5 percent when average yield rate of the construction sector amounting to 4.8 percent,. In the following year, the company's net profit amounted to 31.8 billion won with pay-out ratio reaching 54.4 percent. Dividend per share amounted to 500 won per share at dividend yield rate recording 3.6 percent against industry average of 1.4 percent. In 2002, the company's net profit shot up to 121.7 billion won with pay-out ratio reaching 22.4 percent and DPS amounting to 700 per share.
The company's share-friendly management undertook buy-back and cancellation of its shares over three different occasions in the past five years. The first such move occurred in September, 2001, when the company retired over 14 million shares including over 600,000 preferred shares. In January of last year, the company retired 3,700,000 shares, which was followed by the retirement of 1.4 million shares including 400,000 preferred shares. The company's ownership structure showed that foreigners own 68.2 percent of its shares with 7.8 percent shared by domestic institutions and individual investors. Major shareholder holds 24 percent of stakes as of Nov. last year.
The company's paid-in capital amounted to 290 billion won before September, 2001, but it was down to 219 billion won in September, 2001 and it stood the same in the following year and 2003. Key investment merits include the government plan to prop up the Korean economy by expanding SOC infrastructure projects would be the great catalyst of the construction market growth.
The robust petrochemical market would be going forward due to mismatch of demand and supply. In addition, product mix strategy will be applied to raise profitability, maximizing shareholder's value through the company's share retirement plan and continued high dividend returns.
Daelim Industry projected that total construction orders for last year would total around 85 trillion won, down 16.7 percent year-on-year, but the market would be turned around in second half of this year helped by the government's boosting measures.
The measures include: expanding private investment in social overhead capital projects; the government injection of 116 trillion won in its fiscal budget into the SOC & Infrastructure works by 200; and the involvement of pension funds & various private funds with SOC & Infrastructure works.
The government has decided to promote 2 tentative projects, which will be the industrial cluster and leisure complex whose costs amount to 22 trillion won. The government also plans to ease strict regulations on housing with 13 places out of 50 had been deregulated from speculation zones as of Nov.30 last year and further release is to be considered. Daelim projects Korean overseas builders should be able to increase their overseas orders this year, especially in the Middle East, due to the continuing high oil prices and product price hike. Daelim has been leading the industry in getting orders for public works since 2001 Private investment in SOC will be expanded by utilizing public & private funds(pension funds,etc). This year, the government will allocate 10 trillion won of pension and private funds into PPI(private participation in infrastructure) projects. Project types will be diversified to include public facilities such as schools, hospitals, etc., not limited to SOC(roads, railways and harbors, etc.)
Daelim has secured 14 BTO contracts worth 2.3 trillion won and submitted its bids for 6 additional projects amounting to 1.5 trillion won. There have been plans to build 4 types of corporate cities including industrial clusters, R&D, leisure complex, and regional hub whose costs amount to 40 trillion won. nw