South Korean builder Daelim Industrial Co. is making a strong comeback thanks to recovery in its petrochemical and mainstay housing development businesses.

According to Seoul-based financial information provider FnGuide, Daelim Industrial’s operating profit for full 2017 is expected to double to 527.0 billion won ($458.5 million) from two years earlier. The sales for the year are estimated to hit 10.6 billion won.

Daelim Industrial, boasting 78 years of history, is one of the country’s leading construction companies that build residential apartments and industrial plants. Its business also spans to petrochemicals production. Despite its strong presence, it had recorded massive loss and lost control over its key construction subsidiary Samho in 2011 amid economic slowdown following the global 2008-2009 financial crisis.

The rosy outlook for the year comes from Daelim Industrial’s strong performance in the construction market at home and abroad. The builder secured a 2.3 trillion won worth of order to construct a refinery in Iran where the firm has been aggressively seeking business opportunities after the lift of international economic sanctions on the Islamic country.

At home, Daelim Industrial is ready to sell 18,000 new apartments that it has built. Market experts expect that little would be left unsold as the new apartments are located in the big cities including Incheon and Busan. The company earned 4.2 trillion won in sales from its construction business last year, jumping 60 percent from the previous year.

The petrochemical business is also expected to add a boost to Daelim Industrial’s 2017 performance. Although the sales from the petrochemical business comprise only 11 percent of the firm’s overall revenue, it posted 192.1 billion won in operating profit last year, accounting for 45 percent of the whole operating income. But the operating profit margin of its construction and civil engineering unit hovers around 4 to 5 percent, similar to that of other builders.

At the end of 2016, Daelim Industrial owned 1.6 trillion won worth of cashable assets, and its debt ratio has fallen to 140 percent from 151 percent in 2015.

Samho, one of its key construction subsidiary that has returned to Daelim Industrial from creditors, is also expected to bolster the firm’s growth. Samho suffered from liquidity trouble following the 2008-2009 global financial crisis and it was placed under out-of-court debt restructuring program in January 2009. It posted massive losses from 2010 to 2012 and Daelim Industrial lost its management rights in Samho to its creditors in 2011.

But as local housing market regained strength, Samho made its exit from the workout program and Daelim Industrial recovered its control over the construction unit by increasing its stake in Samho to 72.94 percent in June to 41.81 percent in March this year.

The earnings from Samho is expected to be reflected in Daelim Industrial’s income statement starting the third quarter, helping the firm improve its operating profit for this year by 6 percent, said Song Yoo-lim, an analyst at Hanwha Investment & Securities Co.

At 1:34 p.m. on Wednesday, shares of Daelim Industrial stood at 89,300 won, down 300 won or 0.33 percent from the previous session.

By Moon Il-ho

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