What Happened?: Sambu Construction Announces H1 2025 Earnings

Sambu Construction announced its H1 2025 earnings, reporting revenue of KRW 41.6 billion (+749% YoY), operating loss of KRW 30.2 billion (-3% YoY), and net loss of KRW 48.9 billion (-65% YoY). While revenue significantly exceeded expectations, operating and net losses widened, falling short of market forecasts.

Why These Results?: Deteriorating Financial Structure and Uncertain Rehabilitation

The primary reason for this underperformance is the continued deterioration of the company’s fundamental financial structure, despite a temporary revenue increase due to ongoing rehabilitation proceedings. The auditor’s ‘disclaimer of opinion’ on the 71st business report further raises concerns about the reliability of the financial statements and negatively impacts the company’s value. Furthermore, uncertainties surrounding the rehabilitation proceedings and outstanding payments for uncommenced projects contribute to doubts about the company’s recovery.

What’s Next?: Increased Investment Risk and Sell Recommendation

Rising raw material prices and exchange rate volatility are expected to exacerbate cost pressures, making profitability improvements even more challenging. Considering these factors, the investment outlook for Sambu Construction is ‘very negative,’ and we recommend selling the stock.

Investor Action Plan

  • Closely monitor the progress of the rehabilitation proceedings and the success of the rehabilitation plan.
  • Seek additional information regarding the reasons for the auditor’s ‘disclaimer of opinion.’
  • Prioritize the company’s fundamental restructuring over short-term performance fluctuations.