[Changing Global Construction ④] 'Non-Residential Rebound'... Construction Stocks Surge 30% on AIDC and Nuclear Power Boom

Construction Stocks Lead August Monthly Gains
"Order Growth Cycle Expected to Continue for 2–3 Years"

The share prices of domestic construction companies ranked first in monthly gains last month, driven by strong orders in the non-residential sector such as artificial intelligence (AI) data centers (DCs), nuclear power plants, and large overseas plant projects.

According to the financial information service provider Yonhap Infomax on September 9, construction stocks posted a monthly increase of 33.1% on the KOSPI in August. This gain was significantly higher than that recorded by the machinery and equipment (each 18%) and metals (17%) sectors, which ranked second and third, respectively. In just the final week of August, share prices for construction companies surged by 15.6%, outperforming the KOSPI index by 17.4 percentage points. However, in early September, as investors sought to realize profits, construction stocks fell by 5.6 percentage points within one week.

Securities industry analysts have noted that Korean construction companies are breaking away from a business structure centered on urban redevelopment and residential sectors and are expanding into high value-added non-residential areas such as AI data centers (AIDCs), nuclear power plants, and overseas energy plants. As a result, they predict that the cycle of order growth will continue.

Hanwha Investment & Securities stated, "Multiple construction companies are showing the possibility of achieving their largest-ever orders." The firm analyzed that, "Unlike the past few years, when order strength was led by the urban redevelopment-focused residential sector, most of the order growth over the next two to three years is expected to be generated from non-residential areas. This bodes even more positively for future earnings estimate revisions." Shinhan Investment & Securities also reported, "Although some profit-taking sales continued due to favorable AIDC news, expectations for Team Korea nuclear power plant orders increased following reports of Korea Electric Power Corporation potentially acquiring a stake in Westinghouse. As a result, share prices of nuclear-related stocks rebounded rapidly."

For Daewoo Engineering & Construction, factors cited for potential performance improvement include the Czech Dukovany nuclear power plant project, LNG projects in Papua New Guinea and Mozambique, the new airport construction in Gadeokdo, and the AIDC establishment memorandum of understanding (MOU) with Jangseong County and Gangjin County in South Jeolla Province.

GS Engineering & Construction has a record of winning a total of 21 DC orders and has accumulated expertise in DC operations through its subsidiary DC Bridge. Each time there is speculation about new overseas nuclear power plant project orders, GS E&C is highlighted as a top contender.

The securities industry forecasts that Hyundai Engineering & Construction is expected to sign a partial contract for the U.S. Holtec Palisades small modular reactor (SMR) project in the second half of this year. There is also the possibility of partial contracts for four units of the Matador project in the United States and for units 7 and 8 of the Kozloduy power plant in Bulgaria.

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