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GS Engineering Plunges by Limit on ‘Earnings Shock’: Seoul Mover

GS Engineering Plunges by Limit on ‘Earnings Shock’
Buildings are constructed at a site developed by GS Engineering & Construction Corp. in Seoul on Jan. 7, 2009. Photographer: Nasha Lee/Bloomberg

GS Engineering & Construction Corp. tumbled by the daily limit in Seoul trading, leading declines among South Korean builders, after reporting an unexpected loss.

GS Engineering plunged 15 percent to 42,000 won at the close on the Korea Exchange, the steepest loss since December 1998 and making it the worst-performer on the MSCI Asia Pacific Index. The 34-member Kospi Construction Index slumped 5.3 percent to the lowest level since December 2008.

The Seoul-based builder posted an operating loss of 535.4 billion won ($474 million) for the first quarter, the company said in a regulatory filing yesterday. Analysts had expected a profit, data compiled by Bloomberg show. Deutsche Bank AG cut its stock rating to sell, while Daiwa Capital Markets did the same, citing “large” losses from overseas projects.

“It’s an earnings shock and the share-price slump seems inevitable,” Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $29 billion, said by phone today. “The result raised concerns about overall builders’ margin for overseas projects.”

Daelim Industrial Co. sank 9.3 percent, Samsung Engineering Co. slid 11 percent and Hyundai Engineering & Construction Co. retreated 5.2 percent.

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