(013360) ILSUNG CONSTRUCTION Contract Termination: A Deep Dive for Investors (013360 Stock Analysis)

The recent news of the ILSUNG CONSTRUCTION CO.,LTD (013360) contract termination has sent ripples through the investment community. A cancelled ₩35.1 billion won agreement is a significant event, raising critical questions about the company’s financial stability, future revenue, and the outlook for the ILSUNG CONSTRUCTION stock. For current and prospective investors, this development is more than a headline; it’s a pivotal moment that demands a thorough and clear-headed analysis.

This comprehensive report breaks down the immediate and long-term consequences of this contract cancellation. We will explore the direct impact on revenue, the potential strain on the company’s financial health, and how this event could reshape market sentiment. By understanding the full context, investors can navigate the uncertainty and make informed decisions about their strategy for ticker 013360.

The Core Event: A ₩35.1 Billion Contract Voided

On October 29, 2025, ILSUNG CONSTRUCTION CO.,LTD officially disclosed the termination of a major construction contract with the Samdeok Jinju Apartment Small-Scale Redevelopment Project Association. The contract, valued at ₩35.1 billion, represented a significant 7.01% of the company’s recent annual revenue. This is not a minor setback; it’s a substantial loss of projected income.

The official reason cited was a “termination notice from the counterparty,” a detail that warrants closer inspection. The specifics can be verified directly from the Official Disclosure (DART Source). Here are the key facts at a glance:

• •Counterparty: Samdeok Jinju Apartment Small-Scale Redevelopment Project Association
• •Termination Amount: ₩35.1 billion KRW
• •Proportion of Revenue: 7.01%
• •Reason for Termination: Notice from the counterparty

Financial Fallout: Analyzing the Impact on ILSUNG CONSTRUCTION

While ILSUNG CONSTRUCTION has a substantial order backlog of ₩3.07 trillion, the immediate financial implications of this termination cannot be understated. It introduces volatility into a company that had shown signs of stabilizing.

Immediate Concerns: Revenue, Profitability, and Cash Flow

The primary impact is a direct hit to the 2025 revenue forecast. This cancellation jeopardizes the positive momentum from the semi-annual report, which showed a turnaround to operating profit. Beyond the top line, the termination introduces risks to profitability. The company may face challenges recovering costs for work already completed or could incur penalty fees, directly squeezing margins. This could also strain cash flow, a critical metric for any construction firm, especially if progress payments are delayed or deposits must be returned.

Long-Term Fundamentals and Existing Risks

This event magnifies existing concerns about ILSUNG’s financial health. The company already carries a high debt burden and manages significant Project Financing (PF) contingent liabilities. In a volatile economic climate with fluctuating interest rates, as detailed in reports from institutions like the Bank of Korea Economic Research Institute, these liabilities are a major source of risk. Any further deterioration in profitability or cash flow from this termination could exacerbate these financial pressures, making it harder to service debt and fund ongoing operations.

While the company’s ₩3.07 trillion backlog provides a cushion, the ILSUNG CONSTRUCTION contract termination acts as a stress test on its financial resilience and project management credibility, which the market will watch closely.

Market Reaction and Investor Strategy

Historically, news of a significant contract termination is a bearish signal for a construction company’s stock. It raises questions about the company’s ability to execute its pipeline and maintain client relationships. For ILSUNG CONSTRUCTION stock (013360), which has already seen a decline in 2025, this news is likely to fuel negative sentiment in the short term.

Investors should consider the following strategic actions:

• •Demand Transparency: Watch for follow-up disclosures from ILSUNG regarding the specific financial impact. How much will be written off? Are there penalties? Clarity is key to reassessing the company’s value.
• •Monitor New Orders: The most effective way to offset this loss is by securing new contracts. Aggressive and successful business development will be a crucial indicator of the company’s recovery.
• •Re-evaluate Financial Risk: Pay close attention to the company’s next quarterly report for any changes in its debt levels and management of PF liabilities. For more on this, see our guide to analyzing construction company financials.

Conclusion: Proceed with Caution

The ₩35.1 billion ILSUNG CONSTRUCTION contract termination is a material event that introduces significant uncertainty. While the company’s large backlog offers some stability, the immediate hit to revenue and the potential strain on an already leveraged balance sheet are serious risks. Investors should adopt a cautious stance, closely monitoring the company’s strategic response, financial disclosures, and ability to replenish its project pipeline before making any new capital commitments.