[Click eStock] "GS Engineering & Construction Rides Order Momentum... Target Price Up"

Kyobo: "Expectations Rise for Orders in Data Centers and Plants"

On July 15, Kyobo Securities raised its target price for GS Engineering & Construction from 24,000 won to 34,000 won, while maintaining its "Buy" investment rating.

Sangho Lee, a researcher at Kyobo Securities, stated, "Since COVID-19, the housing and construction market has entered a phase of profitability recovery. The continuous accumulation of orders for urban redevelopment projects in the housing and construction sector serves as a basis for expanded valuation."

He also suggested that if order visibility improves for data centers and plants, the upper valuation band could expand further. Lee explained, "Although plant orders are being delayed due to the situation with Middle Eastern clients, orders are expected in the second half for projects such as Tufras SAF and in Oman. Furthermore, GS Group's announcement of its data center construction plans strengthens the order momentum potential, with a total capacity of 2.4GW. Project advancement could occur as early as the end of this year or, at the latest, in the first half of next year."

GS Engineering & Construction is expected to achieve consolidated sales of 2.7 trillion won and an operating profit of 116.8 billion won in the second quarter this year, which is in line with the market consensus of 120 billion won. Lee said, "Even amid the bottoming of housing and construction performance, margin normalization is helping to defend profits. For plants, excluding one-off expenses in the previous quarter, the recurring margin is expected to be approximately 9.2%."

He believes this year marks a recovery in GS Engineering & Construction's sales from previous lows. Lee commented, "We expect second-half sales to return to year-over-year growth. New orders in construction and housing have increased rapidly since 2023 and will be fully reflected in revenue starting this year. If current trends continue, orders in the housing and construction sector could surpass last year's record-high level of 15.7 trillion won."

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