[Click eStock] Still Room to Rise... Data Center and Pre-sales Raise Expectations for This Construction Stock

Meritz Securities has raised its target price for GS Engineering & Construction (GS E&C) from 35,000 won to 41,000 won while maintaining its "Buy" investment rating.

On July 28, Moon Kyung-won, a researcher at Meritz Securities, stated, “This is a result of reflecting the potential growth momentum in the data center and nuclear power plant businesses. Although high interest rates and construction costs are putting pressure on earnings and valuation, these concerns are being eased by the company’s recent robust pre-sales performance and solid cash flow.”

GS E&C is positioning artificial intelligence (AI) data centers as a new growth engine. Notably, the company plans to begin construction of a 100MW-scale AI data center next year at the Donghae Bukpyeong No. 2 General Industrial Complex. By 2028, GS E&C aims to build a total of 1.2GW capacity, with an additional 1.2GW planned by 2029. Researcher Moon explained, “Gangwon Province is an area with ample power and water resources. While it remains to be confirmed whether tenants and funding for the full 2.4GW completion by 2029 have been secured, if the project expands incrementally in several hundred-megawatt phases over a decade, there is sufficient possibility for success.”

This year’s pre-sale plans are likely to exceed the company’s guidance of 14,000 units. Researcher Moon added, “The main reason for weak earnings in the first half of this year was a decline in housing revenue due to last year’s sluggish pre-sales, but expectations for next year’s performance are actually growing. In addition, if contracts continue to be observed before the power grid impact assessment for the Donghae data center is finalized by September, with groundbreaking scheduled for November and 100MW completion by the end of next year, the share price could rise significantly.”

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