Shinhan Investment Corp. announced on September 16 that it has raised its target price for GS Construction from 38,000 won to 47,000 won, citing an expansion in its contracting areas to include housing, data centers, and nuclear power plants. The investment opinion remains a 'buy.'
Kim Sun-mi, a researcher at Shinhan Investment Corp., stated, "We have adjusted the target multiple from 9 times to 10 times for the domestic sector to reflect the expanded order momentum, and we have also removed the previously applied market discount rate of 10%. This adjustment was made using the sum-of-the-parts (SOTP) valuation method for each business segment."
Kim also indicated the potential for further upward revisions in performance forecasts. He projected that GS Construction's revenue and operating profit for 2027 would reach 11.8 trillion won and 599.5 billion won, respectively, representing growth of 7.4% and 5.5% compared to this year. However, he noted that there is a possibility for additional upward revisions.
In particular, the data center contracts were highlighted as a short-term performance variable. He mentioned, "If the Donghae AI data center, with a capacity of 100 MW, begins construction, it could boost the company's overall performance by 3% to 5% in 2027-2028. The project has passed the final review for the power system impact assessment, and the 100 MW construction permit review is underway, aiming for approval in September and construction to start in November."
The housing sector is also expected to contribute to performance improvements. Kim noted, "As of September, the new housing sales are projected to exceed the annual target with 15,000 units. The high proportion of sales in the first half of the year is expected to contribute to revenue growth in 2027, and operating profit is anticipated to improve rapidly starting in the second half of 2027 when execution rates are confirmed. The potential for improved financial structure following the sale of GS Inima is also a key point to watch in the second half of the year."
He added, "Despite the recent rise in stock prices, the current price-to-book ratio (PBR) stands at 0.6 times, which is still over 20% lower than competitors. We expect the valuation gap to narrow as the schedules for major projects become more concrete."
* This article has been translated by AI.
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