[Click e-Stock] GS E&C: Core Business Normalization Plus Overseas Order Momentum

Daishin Securities Initiates Coverage on GS E&C
Sets Target Price at 39,000 Won

On June 17, Daishin Securities initiated coverage on GS E&C, assigning a "Buy" investment rating and a target price of 39,000 won. The firm cited not only the normalization of its core domestic housing business but also expectations for overseas order momentum.

Hyejin Lee, an analyst at Daishin Securities, stated, "Approximately 60% of GS E&C's revenue comes from its architecture and housing segment. Although revenue has declined since 2023 due to a decrease in new project starts, profitability is improving as high-cost projects are being completed." She added, "In the second half of the year, earnings are expected to recover, driven by an improved housing mix, revenue recognition from new starts, and the full-scale contribution of data center revenue."

Regarding the overseas business, the analyst highlighted additional upside momentum stemming from potential participation in nuclear power and Middle Eastern reconstruction projects. Lee commented, "Based on its domestic track record in nuclear power plant construction (as a non-lead contractor), GS E&C is anticipated to participate in Team Korea's nuclear power projects in Vietnam and Saudi Arabia." She further evaluated, "The company has strong competitiveness in winning orders, backed by over 20 years of accumulated experience and a robust local network in Vietnam."

On the topic of Middle Eastern reconstruction, she noted, "GS E&C holds a construction track record across the Middle East and previously secured a direct contract for the 2017 fire restoration project in Ruwais, UAE, as the main contractor." She added, "This prime contractor status is expected to enhance the company's prospects for winning future Middle East reconstruction orders."

According to Daishin Securities' forecast, GS E&C's consolidated revenue for 2026 is projected at 11.3608 trillion won, down 8.8% from the previous year, while operating profit is expected to increase by 7.5% to 471.2 billion won (operating margin of 4.1%). Lee added, "The target price of 39,000 won was calculated by applying a target PBR (price-to-book ratio) of 0.65x to the 12-month forward BPS (book value per share)."

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