South Korea’s Doosan Infracore Co. is expected to report strong earnings for the second quarter thanks to a surge in its excavator sales in China following the recovery in the country’s construction market. Rosy outlook for its earnings for the rest of this year also bodes well for its stocks.

According to China Construction Machinery Association (CCMA) on Tuesday, a total of 8,226 excavators were sold in China in June, up 125 percent from the same month last year. It is the highest monthly sales figure in the country since 2011.

The booming excavator market in China has led Doosan Infracore to enjoy a surge in sales. In June, the company sold 766 excavators in China, up 228.8 percent from a year ago and 0.6 percentage point from a month ago. Its excavator sales accounted for 9.3 percent of the entire market, placing Doosan Infracore to rank fourth after SANY Group, Caterpillar Inc., and XCMG Group.

In the January-June period in Chin, Doosan Infracore has sold a total of 6,095 excavators, already surpassing its total sales of 4,627 units for full 2016.

The vibrant excavator market in China comes after the country’s infrastructure market has rapidly recovered from last year’s recession. The recovery has been mainly driven by China’s One Belt One Road economic development project and the county’s push to develop Xiongan district in the northern province of Hebei.

Demand for excavators is expected to grow even more as the Chinese authority plans to continue to expand infrastructure construction through public private partnership investment.

Jung Dong-ik, a researcher at KB Securities Co., forecast that Doosan Infracore will likely report a 17.7 percent on-year increase in operating income to 204.2 billion won ($177.3 million) on an 11.2 percent rise in sales to 1.8 trillion won in the second quarter of this year. The brokerage raised its target stock price for Doosan Infracore from the previous 9,700 won to 10,500 won.

Doosan Infracore shares fell 1.99 percent or 170 won from the previous session to close at 8,370 won on Tuesday.

By Kim Dae-gi

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