[Click eStock] "Construction Companies to Be Re-Evaluated with AI Ecosystem Development... Overweight Recommendation"

"Expected Benefits from the Three Major Mega Projects"

"A Super-Large-Scale Project Exceeding 1,400 Trillion Won"

There are growing expectations in the securities industry that the recently subdued construction sector will be re-evaluated as part of the process to build an artificial intelligence (AI) ecosystem. This is because the government’s announcement of a project worth 1,400 trillion won is expected to lead to an increase in construction orders.

According to Shinhan Investment Corp. on July 1, analyst Kim Sunmi stated the previous day, “The three major mega projects for Korea’s great leap forward, announced by the government, will provide new business opportunities for construction companies,” maintaining an “overweight” investment opinion on the construction sector.

"The Beginning of Mega Projects: Construction"

President Lee Jae-myung, Samsung Electronics Chairman Lee Jae-yong, and SK Group Chairman Chey Tae-won are holding hands after announcing corporate investments at the National Report Meeting on Three Major Mega Projects held at the Blue House on the 29th of last month. Photo by Yonhap News Agency

On June 29, the government announced the three major mega projects for Korea’s great leap forward, focusing on semiconductors, physical AI, and AI data centers. The initiative is aimed at expanding a Korean-style AI ecosystem to foster future growth engines, with investments planned primarily outside the Seoul metropolitan area.

Analyst Kim explained, “This is a super-large-scale project with an announced value exceeding 1,400 trillion won. Although actual investments will be concentrated in semiconductors, robots, and communication networks, the construction industry will see expanded business opportunities in areas such as the creation of industrial complexes, construction of production facilities, establishment of power infrastructure, and data center development.” She also highlighted the potential for expanded global energy infrastructure investment following the U.S.-Iran war as a point to watch.

Comprehensive Benefits from Major Corporations to Regional Builders

She predicted that orders for semiconductor fabs, clean rooms, and data centers would be mainly handled by large group-affiliated builders such as SAMSUNG E&A, Hyundai Engineering & Construction, and GS Engineering & Construction. However, she noted that regional construction companies are likely to participate in foundational infrastructure and supporting development projects.

Analyst Kim commented, “It is important to consider institutional arrangements favoring bids by regional builders, such as mandatory regional joint ventures and the evaluation of regional economic contributions in the comprehensive assessment bidding system.” She analyzed, “As incentives for regional companies to secure stakes in infrastructure projects worth over 30 billion won and in the establishment of industrial complexes increase, there will be more active joint bidding between major corporations and regional builders.”

Additionally, analyst Kim added, “The market’s focus remains on housing indicators, so the sector’s price-to-book ratio (PBR) is only 1.0. Although it will take a long time for these projects to contribute to earnings, participation in the global market expansion centered on nuclear power and LNG, as well as domestic AI ecosystem projects, are clear catalysts for a re-evaluation of the sector.”

This content was produced with the assistance of AI translation services.