Eugene Corporation, the largest ready-mix concrete (RMC) producer in South Korea, is receiving renewed attention as one of the top stock market picks to benefit from a boom in the domestic construction market and the new government’s urban renewal projects.

The company combined with its subsidiary Tongyang took up 9 percent in the local RMC market with an output of more than 2 million cubic meters in the second quarter of this year. It is a de facto holding company of 64 Eugene Group affiliates under its arm.

Market analysts believe Eugene Corporation would benefit from Korea’s enlarged construction market measured by total orders. The 10-year total construction orders averaged 100 trillion won ($87.3 billion) a year but the figure has remained over 150 trillion won since 2015. Orders in the first four months of this year already surpassed 50 trillion won and the pace of market expansion is expected to accelerate further as the Moon Jae-in government has pledged to embark on massive urban projects for regionally balanced development and sustainability.

RMC by nature is significantly affected by a transport distance, but Eugene’s 14 metro-focused plants in Gyeonggi Province that surrounds the capital city of Seoul can exceed the geographical limit, ensuring delivery within 90 minutes from production to usage.

It also takes advantage of a rising unit price of RMC caused by soaring costs in sands, gravels and aggregates that form RMC. RMC supply prices gained nearly 8 percent in half a year’s time.

Eugene’s earnings are surging, driven by price and output increases. Operating profit came to a record 96.7 billion won last year, up close to 80 percent from a year ago. First-quarter sales grew 23.6 percent on-year to 264.3 billion won with operating profit up 51.8 percent to 17 billion won.

Market experts say the company could easily meet a full-year target of 1.21 trillion won in sales and 110 billion won in operating profit this year.

Engene shares closed Wednesday 1.5 percent up at 6,780 won.

By Jung Woo-sung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]