KOSPIConstruction & Materials000720

Hyundai Engineering & Construction

₩114,600▼ 2.22%2026-10-02 close

Market Cap

₩12.7T

Turnover

₩79.1B

Volume

690,000 shares

Shares out.

110M

PER

30.0×

PBR

1.5×

EPS

₩3,986

Dividend Yield

0.67%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩800 per share · Prices as of the 2026-10-02 close

Report overview

Between a 100 Trillion Won Backlog and Nuclear Contracts

Revenue is shrinking while margins recover and the order backlog has topped 100 trillion won for the first time; the crux is how much of the nuclear pipeline converts into signed contracts and actual cash flow.

1
The company swung from a 1,263.4 billion won operating loss in 2024 to a 653.0 billion won operating profit in 2025, and quarterly operating profit improved for four straight quarters from a low of 103.5 billion won in 3Q25 to 261.8 billion won in 2Q26.
2
Revenue narrowed from 31.06 trillion won in 2025 to the 6 trillion won range per quarter in 2026, while the company attributed the profit recovery to better housing cost ratios and a higher share of adequately priced projects.
3
First-half 2026 new orders reached 22.82 trillion won, up 36.4% year on year, and backlog hit 103.98 trillion won, the first time above 100 trillion won in company history (company release, July 31, 2026).
4
A framework agreement with TerraPower of the United States secured partner rights for up to eight follow-on Natrium units (August 18, 2026), yet nuclear timelines can slip with permitting and financing.
5
Operating cash flow was negative in all four years since 2022, including minus 748.3 billion won in 2025, so the gap between profit recovery and cash generation is the key item to monitor.

Business structure

Hyundai E&C is a diversified contractor spanning civil works, building and housing, plant and power, consolidating subsidiaries such as Hyundai Engineering, and it posted consolidated revenue of 31.06 trillion won in 2025.

Its center of gravity splits between domestic housing and urban redevelopment on one side and overseas plant and energy work on the other, and first-half 2026 orders were led by group-linked, higher value-added projects such as an electric arc furnace steel mill in the United States and the Bokjeong Station area mixed-use development.

New orders rose 36.4% year on year to 22.82 trillion won, driven by projects executed with group affiliates and by high value-added businesses.

In plant work, Saudi Arabia's Amiral and the Shaheen project in Ulsan underpin revenue, and press reports state that plant division revenue rose 12% from 1,138 billion won to 1,276 billion won partly on the Shaheen project (Herald Economy, May 2026).

The company has declared a shift toward becoming a comprehensive energy solutions provider in 2026, widening its portfolio across large nuclear, small modular reactors, solar, offshore wind and data centers.

It has built 24 large nuclear units and has recently expanded in the United States into large reactors, SMRs and decommissioning.

Its partner map centers on cooperation with overseas technology owners such as Westinghouse, Holtec and TerraPower, and with Samsung C&T tied to NuScale and DL E&C to X-energy, contractor-specific partnership models are proliferating, making domestic rivalry partly a contest of alliances.

In domestic nuclear construction, Shin-Hanul units 3 and 4 stand at roughly 11% progress and are set to reach peak construction in 2027 and 2028. Its credit rating remains AA-, among the highest in the industry.

Earnings trend

Quarterly revenue · Operating profit

₩7.7T₩217B25Q2₩7.8T₩103.5B25Q3₩8.1T₩118.8B25Q4₩6.3T₩180.9B26Q1₩6.8T₩261.8B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩21.2T₩574.9B2022₩29.7T₩785.4B2023₩32.7T-₩1.3T2024₩31.1T₩653B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩7.7T	₩217B	2.8%
2025Q3	₩7.8T	₩103.5B	1.3%
2025Q4	₩8.1T	₩118.8B	1.5%
2026Q1	₩6.3T	₩180.9B	2.9%
2026Q2	₩6.8T	₩261.8B	3.8%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩21.2T	₩574.9B	₩408.9B	2.7%	5.3%	110.7%
2023	₩29.7T	₩785.4B	₩535.9B	2.6%	6.6%	126.8%
2024	₩32.7T	-₩1.3T	-₩168.7B	−3.9%	−2.1%	179.3%
2025	₩31.1T	₩653B	₩373.1B	2.1%	4.5%	174.8%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

Annually, the trajectory ran from 21.24 trillion won of revenue and 574.9 billion won of operating profit in 2022 (2.7% margin) and 29.65 trillion won with 785.4 billion won in 2023 (2.6%), to a sharp break in 2024 when 32.67 trillion won of revenue still produced a 1,263.4 billion won operating loss (minus 3.9%), before a return to profit in 2025 with 31.06 trillion won of revenue and 653.0 billion won of operating profit (2.1%).

Net profit attributable to owners was 373.1 billion won in 2025, reversing minus 168.7 billion won in 2024. Quarterly, operating profit fell from 217.0 billion won in 2Q25 to 103.5 billion won in 3Q25 and 118.8 billion won in 4Q25, then improved to 180.9 billion won in 1Q26 and 261.8 billion won in 2Q26.

Over the same span revenue shrank from 8.06 trillion won in 4Q25 to 6.28 trillion won in 1Q26 and 6.84 trillion won in 2Q26, so top line and profit moved in opposite directions.

The operating margin climbed from roughly 1.3% in 3Q25 and 1.5% in 4Q25 to about 2.9% in 1Q26 and 3.8% in 2Q26, and the company cited improved housing cost ratios and a larger share of adequately priced projects, noting first-half operating profit equaled 55.3% of its annual target.

Net profit attributable to owners was 173.5 billion won in 1Q26 and 116.4 billion won in 2Q26, a swing wide enough that non-operating items such as currency, equity-method results and valuation gains deserve attention.

On the balance sheet, the debt-to-equity ratio rose from 110.7% in 2022 to 179.3% in 2024 before easing to 174.8% in 2025, and the company said the ratio fell 19.6 percentage points to 155.2% in the first half of 2026 as asset revaluation bolstered equity.

Still, operating cash flow was an outflow for four consecutive years at minus 143.5 billion won in 2022, minus 714.7 billion won in 2023, minus 118.8 billion won in 2024 and minus 748.3 billion won in 2025, and Eugene Investment analyst Ryu Tae-hwan flagged the need for continued monitoring as receivables and unbilled construction rose and turnover slowed, with 1Q26 trade receivables at 7,663.6 billion won, more than 800 billion won above the prior year-end (Yonhap Infomax, July 2026).

Industry analysis

Domestic construction indicators show a split: orders recovering while execution lags.

At a June 2026 seminar, the Construction and Economy Research Institute of Korea projected 2026 domestic construction orders up 8.9% to 240.8 trillion won, construction investment up 0.3% to 266.1 trillion won, national home prices up 2.5% and jeonse up 5.0%.

However, the cumulative gap between permits and construction starts equals 1.8 times average annual start area, with higher build costs, tighter project financing screening and unsold inventory in provincial markets delaying groundbreakings.

Execution data are also soft: construction output fell 5.3% in the first half of 2026, the construction cost index rose 4.2% through the first half, and the industry business survey index stood at 56 in July versus 77 for all industries, a 21-point gap (Research Institute of Construction Policy, August 2026).

For large contractors, therefore, the quality of overseas and energy orders matters more than domestic housing volume.

Nuclear demand debate keeps expanding, and BNK Securities analyst Lee Sun-il estimated 346 GWe of new global nuclear capacity through 2040, worth about 1.9 trillion dollars of contractor-addressable work, or 1.3 trillion dollars excluding China, with Korean builders potentially taking around a 20% share (Herald Economy, May 2026).

On competitive positioning, Hyundai E&C combines completed overseas large reactors with ongoing domestic nuclear construction, giving it a deep execution record, yet industry voices warn that because North American and European large reactors center on Westinghouse AP1000 lineage technology, a structure in which foreign firms design and Korean firms mainly build could become entrenched.

The cycle thus sits at a transition point where a possible domestic housing trough overlaps with the start of overseas energy awards.

Outlook

Management's stated direction is selective, profitability-first order taking plus energy expansion. Hyundai E&C said it will keep pursuing profitability-centered projects in the second half against geopolitical and external variables while developing new growth businesses under its H-Road strategy.

In nuclear, on August 18, 2026 it announced a framework agreement with TerraPower for the Natrium program, securing EPC partner rights for up to eight units following the 345 MW Kemmerer Unit 1 in Wyoming.

In May 2026 it signed a next-generation nuclear memorandum with TerraPower and HD Hyundai, pairing its EPC capability with HD Hyundai's main equipment manufacturing.

On contract timing, Shinhan Securities analyst Kim Sun-mi said in an August 2026 report that separate contracts begin from late in the fourth quarter and that valuation premium differentiation would begin in earnest once order competitiveness is confirmed through actual contracts.

Slippage has precedent, however: the market viewed partial delays in expected nuclear order timing as a main cause of first-half share weakness (Yonhap Infomax, July 2026).

On funding, the company disclosed that proceeds from the 500 billion won convertible bond settled in July 2026 will fund new energy operations across offshore wind, solar, SMR and large nuclear, with 250 billion won earmarked for 2026 and 250 billion won for 2027.

Domestically, the Shin-Hanul 3 and 4 schedule peaking in 2027 and 2028 anchors the revenue recognition timetable. On the other hand, industry observers caution that revenue recognition can lag depending on final contracts and construction start dates, and that some pipeline items may still be at an early review stage.

Valuation

PER

30.0×

PBR

1.5×

ROE

5.2%

EPS

₩3,986

BPS

₩82,473

Dividend per share

₩800

On the last four quarters of earnings, the shares trade at an earnings multiple above the range Korean large-cap builders have typically commanded, and at a premium to net asset value.

That reflects both the early stage of the earnings recovery after the swing from a large 2024 operating loss to 2025 profit, and expectations embedded in the nuclear and energy pipeline.

Book value metrics differ by calculation method, so figures published by the exchange and internally computed figures can diverge, and like-for-like comparison is safer. Dividends remain modest even as profits recover, so the axis of total return sits with orders and earnings recovery rather than income.

Broker views diverge: Shinhan Securities said on August 31, 2026 that it maintained a buy rating with a 170,000 won target price and kept the stock as its sector top pick, while Sangsangin Securities said on August 4, 2026 that it cut its target price from 215,000 won to 158,000 won after lowering the energy division EV/EBITDA multiple to 18.3 times and raising the weighted average cost of capital to 10.5%, while keeping a buy rating.

Ultimately the multiple rests on verifiable facts: whether nuclear contracts are actually signed and whether profit converts into cash.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Four Quarters of Margin Repair

Quarterly operating profit improved consecutively from 103.5 billion won in 3Q25 to 118.8 billion won in 4Q25, 180.9 billion won in 1Q26 and 261.8 billion won in 2Q26. With revenue down to the 6 trillion won range, the operating margin rose from around 1% to above 3%.

The company said profitability recovered on better housing cost ratios and a greater share of adequately priced projects. If low-margin sites are indeed rolling off, the question is how much further margin repair remains.

First-Ever 100 Trillion Won Backlog

Backlog rose 9.4% year on year to 103.98 trillion won, exceeding 100 trillion won for the first time in company history and equal to roughly 3.8 years of work. Second-quarter new orders jumped 158.2% year on year to 18.86 trillion won, taking the first-half total to 22.82 trillion won.

With domestic starts and output soft, backlog cushions revenue visibility. Still, the quality of that backlog, meaning margin and start timing, must be verified separately before it becomes profit.

Breadth of Nuclear Partnerships

The company secured EPC partner status for up to eight follow-on Natrium units TerraPower plans to pursue.

KB Securities analyst Jang Moon-jun argued that, on the strength of completed overseas large reactors, it holds the most concrete nuclear pipeline among global contractors likely to convert into actual orders within one to two years.

Shinhan Securities assessed that in overseas work, acting as sole construction partner allows shared bargaining power with lead designers and thus relatively higher profitability. Nuclear revenue also correlates weakly with the domestic housing cycle, adding diversification.

Bear factors

Profit Up, Cash Out

Operating cash flow was negative for four straight years: minus 143.5 billion won in 2022, minus 714.7 billion won in 2023, minus 118.8 billion won in 2024 and minus 748.3 billion won in 2025. Against 653.0 billion won of 2025 operating profit, the divergence between earnings and cash is not small.

Eugene Investment noted slower turnover as receivables and unbilled construction rose and called for continued monitoring, with 1Q26 receivables at 7,663.6 billion won, over 800 billion won above the prior year-end (Yonhap Infomax, July 2026). With upfront spending on large projects rising, this line stays on the watch list.

Shrinking Top Line and Weak Domestic Housing

Revenue fell from 32.67 trillion won in 2024 to 31.06 trillion won in 2025, and 2026 quarterly revenue of 6.28 trillion won and 6.84 trillion won was down double digits year on year. Even with better margins, a thinner revenue base limits how fast absolute profit can rebuild.

Domestic construction output fell 5.3% in the first half of 2026 while building permits declined 5.4% and residential permits dropped 15.4% (Research Institute of Construction Policy, August 2026). If housing starts stay delayed, the question is how much overseas and energy volume fills the post-2027 gap.

Nuclear Timing and Structure Risk

In nuclear, the distance between framework agreements and firm contracts is long. Analysts noted that only part of the expected amount appears conservatively reflected, given that permitting, financing and policy variables can shift award timing.

Indeed, some anticipated nuclear award schedules slipped in the first half (Yonhap Infomax, July 2026). Structurally, observers warn that entrenched cooperation could deepen dependence on technology owners and constrain independent market expansion. Partner funding issues have surfaced before, so counterparty risk belongs in the picture too.

Risk factors

Cost and Construction Prices

The construction cost index had stabilized downward through 2025 but rose 4.2% through the first half of 2026, with renewed increases likely in the second half as raw material prices, exchange rates and imported material costs feed through, potentially eroding private project feasibility and raising public budget re-estimation burdens (Research Institute of Construction Policy, August 2026).

Since cost-ratio improvement anchored the earnings recovery, a renewed cost climb could reverse part of that gain. Overseas sites add exposure to extra costs and schedule extensions that can swing quarterly results.

Shifts in cost assumptions usually surface first in cost-of-sales ratios and unbilled construction in quarterly filings.

Capital and Dilution

A June 2026 board resolution authorized a 500 billion won private convertible bond, settled July 7, 2026 and maturing July 7, 2031, with shares issuable on conversion equal to about 2.98% of outstanding shares and a conversion window from July 7, 2027 to June 7, 2031.

The coupon and yield to maturity are both zero over a five-year term, with the conversion price set at a 15% premium to the share price at the time of the board resolution. Conversion would strengthen equity and lower leverage, while simultaneously increasing the share count. Given that the debt-to-equity ratio reached 179.3% in 2024, capital policy remains something to track.

Policy and Regulation

Tighter safety regulation is likely to become a core driver of construction cycle swings, with schedule delays, cost increases and order avoidance driven by penalty risk potentially causing a sharp drop in new permits and starts (Research Institute of Construction Policy).

In housing, lending rules, taxation and the pace of redevelopment deregulation shape presale and groundbreaking schedules. Overseas, nuclear licensing frameworks and changes in United States procurement structures set contract timing. In both markets, a single regulatory variable can push revenue recognition out by quarters.

What to watch next

Late October to early November 2026
In third-quarter results, check whether the operating margin holds near the 3.8% seen in 2Q26 and how cumulative new orders and backlog move versus the 103.98 trillion won reported at mid-year. Since the company said first-half operating profit equaled 55.3% of its annual target, second-half progress gauges target attainment.
Mid-November 2026
In the third-quarter filing, review trade receivables, unbilled construction balances and the direction of operating cash flow. With 2025 operating cash flow at minus 748.3 billion won, whether the profit recovery is starting to convert into cash is the key evidence.
Fourth quarter of 2026
Watch whether nuclear engagements change form. Shinhan Securities analyst Kim Sun-mi projected in an August 2026 report that separate contracts begin from late in the fourth quarter, so the checkpoint is whether agreements and priority rights turn into disclosed orders.
January to February 2027
Review confirmed full-year 2026 results alongside the 2027 order and revenue plan and the dividend decision. The points to watch are whether the swing from a 2024 operating loss to 2025 profit extended through full-year 2026, and whether nuclear revenue has entered the recognition phase.
July 7, 2027
This is the start of the conversion window for the 500 billion won convertible bond. Per disclosure, shares issuable on conversion equal about 2.98% of outstanding shares, so the pace of conversion brings both equity reinforcement and share count growth.

Overall view

Two facts hold simultaneously in Hyundai E&C's current phase.

First, earnings swung from a 1,263.4 billion won operating loss in 2024 to a 653.0 billion won operating profit in 2025, and quarterly operating profit recovered from 103.5 billion won in 3Q25 to 261.8 billion won in 2Q26, lifting the operating margin from around 1% to above 3%.

Second, revenue shrank and operating cash flow was an outflow for four consecutive years from 2022 to 2025, leaving a gap between profit and cash.

On orders, first-half new orders rose 36.4% year on year to 22.82 trillion won and backlog reached 103.98 trillion won, about 3.8 years of work, which is cited as the basis for revenue visibility.

Against that, domestic construction starts and output remain weak with the cost index turning up again, while overseas nuclear still carries the lag from framework agreement to firm contract plus policy and financing variables.

The shares trade at a premium both to earnings and to net assets, and broker target prices in August alone included both a maintained level and a downward revision.

What matters next is therefore a calendar rather than a narrative: margin durability in third-quarter results, fourth-quarter nuclear separate contracts, and the direction of receivables and cash flow. This report is for information purposes and contains no buy or sell recommendation.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

Show 18 more articles and sources

Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.