1. Paratech’s Q2 Performance: What Happened?
Paratech reported sales of KRW 44 billion, operating profit of KRW 2 billion, and a net loss of KRW 1.1 billion in Q2 2025. While sales decreased compared to the previous quarter, operating profit turned positive. However, the return to a net loss is a cause for concern, potentially attributed to financial expenses or other non-operating losses. The amended business report clarifies the status and revised contract amounts of key projects, highlighting potential delays and financial implications.
2. Drivers of Profitability and Lingering Risks
The return to operating profit in Q2 2025 can be attributed to improved cost management and increased sales in the construction segment. However, high PF contingent liabilities (KRW 209 billion) and outstanding construction receivables (KRW 15.7 billion) pose significant risks. The potential impact of convertible bonds on interest expenses and share dilution should also be considered.
3. Action Plan for Investors
- Positive Factors: Increased sales and return to operating profit in FY52, strong relationships with major clients, and pursuit of new business ventures.
- Negative Factors: High PF contingent liabilities, inherent risks of construction projects, financial burdens, and recent quarterly performance decline.
Investing in Paratech requires careful consideration of various factors, including construction market conditions, client investment plans, new business performance, and management of PF contingent liabilities. Continuous monitoring of future earnings releases and project progress is essential.
Q: What was Paratech’s operating profit in Q2 2025?
A: KRW 2 billion.
Q: Why did Paratech report a net loss in Q2 2025?
A: The net loss is likely due to financial expenses or other non-operating losses.
Q: What are the main risk factors for Paratech?
A: Key risks include high PF contingent liabilities, a slowing construction market, and volatility in client investments.
Q: What should investors consider when evaluating Paratech?
A: Investors should carefully assess the risks and consider the macroeconomic and industry trends before making investment decisions.
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