KOSPIConstruction & Materials006360

GS Engineering & Construction

₩33,150▲ 0.61%2026-10-02 close

Market Cap

₩2.8T

Turnover

₩36.8B

Volume

1.1M

Shares out.

85.6M

PER

23.6×

PBR

0.6×

EPS

₩1,452

Dividend Yield

1.46%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩500 per share · Prices as of the 2026-10-02 close

Report overview

Orders Up, Revenue Down: GS E&C at a Turning Point

Revenue and quarterly operating profit have shrunk on a gap in housing starts, yet urban-redevelopment awards and a data-center pipeline are building at the same time, leaving earnings and order intake pointing in opposite directions.

1
For 2025 the company posted revenue of KRW 12.45tn and operating profit of KRW 437.8bn (3.5% margin), a second straight year of profit recovery from the KRW 387.9bn operating loss of 2023.
2
Quarterly revenue nonetheless fell from KRW 3.196tn in 2Q25 to KRW 2.779tn in 2Q26, with quarterly operating profit narrowing from KRW 162.1bn to KRW 91.4bn over the same span.
3
Guidance filed for 2026 is KRW 11.5tn of revenue and KRW 17.8tn of new orders; 2025 actual new orders of KRW 19.2tn far exceeded the KRW 14.3tn target.
4
New orders of KRW 5.22tn in 2Q26 rose 61.7% year on year, and first-half urban-redevelopment awards alone reached KRW 7.47tn.
5
The group's plan for an AI data-center campus in Donghae, Gangwon has emerged as a new variable alongside potential captive awards, but little of it has yet converted into disclosed, contracted backlog.

Business structure

GS E&C is a diversified contractor built on three pillars - building/housing, plant and infrastructure - with domestic housing and urban redevelopment under the Xi apartment brand at the core of revenue.

In 2Q26, divisional revenue was KRW 1.537tn for building/housing, KRW 402bn for plant and KRW 396.5bn for infrastructure, with plant and infrastructure up 18.0% and 27.4% year on year respectively.

Well over half of group revenue therefore still comes from domestic building and housing, and the workload in that division drives the overall earnings direction.

Customers split between redevelopment associations and developers, public agencies, and industrial or plant owners; in association-awarded redevelopment work, brand strength and construction track record are the decisive competitive variables.

In 2Q26, prime Seoul and capital-region redevelopment projects led order intake, including Sangdaewon District 2 in Seongnam (KRW 1.92tn), Macheon District 3 in Songpa (KRW 1.01tn) and the Seongpo-dong mixed-use project in Ansan (KRW 641.6bn).

The infrastructure division handles domestic civil and environmental work plus overseas transport infrastructure, while the plant division executes refining, chemical and power-related projects.

In non-housing areas, data centers have emerged as a new pillar: the company is shifting toward a developer model spanning investment, development, leasing and operation rather than pure construction, and completed the Epoch Anyang Center data-center development in 2024.

According to Hana Securities material cited in a 30 June 2026 article, GS E&C and consolidated subsidiary Xi C&A had three data centers under way - Goyang, Paju and Sejong - with two more, in Ilsan and Busan, planned during the year.

The competitive landscape combines redevelopment bidding battles with large peers such as Hyundai E&C, Samsung C&T's construction arm, Daewoo E&C and DL E&C, and a parallel race on construction references for data centers and industrial facilities.

Earnings trend

Quarterly revenue · Operating profit

₩3.2T₩162.1B25Q2₩3.2T₩148.5B25Q3₩3T₩56.9B25Q4₩2.4T₩73.5B26Q1₩2.8T₩91.4B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩12.3T₩554.8B2022₩13.4T-₩387.9B2023₩12.9T₩286B2024₩12.5T₩437.8B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩3.2T	₩162.1B	5.1%
2025Q3	₩3.2T	₩148.5B	4.6%
2025Q4	₩3T	₩56.9B	1.9%
2026Q1	₩2.4T	₩73.5B	3.1%
2026Q2	₩2.8T	₩91.4B	3.3%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩12.3T	₩554.8B	₩339.3B	4.5%	7.0%	216.4%
2023	₩13.4T	-₩387.9B	-₩481.9B	−2.9%	−11.2%	262.5%
2024	₩12.9T	₩286B	₩245.6B	2.2%	5.6%	250.0%
2025	₩12.5T	₩437.8B	₩93.5B	3.5%	2.0%	234.2%

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

The annual trajectory is a sharp drop followed by recovery.

After 2023 revenue of KRW 13.44tn with an operating loss of KRW 387.9bn and an owners' net loss of KRW 481.9bn, 2024 swung to revenue of KRW 12.86tn and operating profit of KRW 285.9bn (2.2% margin), improving further in 2025 to revenue of KRW 12.45tn and operating profit of KRW 437.8bn (3.5%).

However, 2025 net profit attributable to owners was KRW 93.5bn, below the KRW 245.6bn of 2024, so gains at the operating line did not fully carry through to the bottom line.

On the balance sheet, the debt-to-equity ratio fell from 262.5% in 2023 to 250.0% in 2024 and 234.2% in 2025, while operating cash flow of KRW 591.5bn in 2025 was more than double the KRW 267.8bn of 2024.

Quarterly figures, by contrast, show clear contraction: revenue moved from KRW 3.196tn in 2Q25 and KRW 3.208tn in 3Q25 to KRW 2.983tn in 4Q25, KRW 2.401tn in 1Q26 and KRW 2.779tn in 2Q26, with operating profit tracing KRW 162.1bn, KRW 148.5bn, KRW 56.9bn, KRW 73.5bn and KRW 91.4bn.

The company explained that building/housing revenue declined as weak housing conditions reduced the number of active construction sites, and said revenue should recover as newly supplied volume enters construction in stages.

In margin terms, the ratio slipped from roughly 5% in 2Q-3Q25 to below 2% in 4Q25 before climbing back into the 3% range in the first half of 2026.

Net profit attributable to owners recovered from a KRW 62.7bn loss in 2Q25 to KRW 89.9bn in 3Q25 and KRW 37.9bn in 4Q25, but came in at effectively breakeven in 1Q26 and KRW 2.6bn in 2Q26.

Total net profit in 2Q26 turned positive at KRW 14.4bn, yet much of it accrued to non-controlling interests, which commentary noted limited the improvement on an owners' basis.

Industry analysis

Korean construction sits in the late stage of a correction in which the earlier gap in housing starts feeds into earnings with a lag. The Korea Research Institute for Construction Policy projected construction investment fell about 9.0% in 2025 to roughly KRW 264tn and would rebound only about 2% in 2026 to KRW 269tn.

The Construction and Economy Research Institute of Korea expected 2026 construction orders to rise 4.0% year on year, with public orders leading the market while private-sector growth stays limited. On the demand side, regional divergence is the key issue.

In the same institute's outlook, the capital region was seen rising 2-3% on structural supply shortage from fewer starts, project-financing risk and delays to third-phase new towns, while provincial prices were seen falling around 1% or staying flat.

Nationwide unsold housing stood at 69,069 units at end-October 2025, up 3.5% month on month, with post-completion unsold units rising to 28,080 - flagged as a funding burden for builders.

GS E&C has been positioned with heavy exposure to Seoul and capital-region redevelopment, and in the second quarter it again secured a run of Seoul and capital-region redevelopment and reconstruction contracts, driving a sharp increase in new orders.

Meanwhile, the 2026 social overhead capital budget of KRW 27.5tn, up 7.9% year on year with expansion in rail, points to a civil-works order recovery that relatively favors peers with larger infrastructure mixes.

In non-housing, data centers and semiconductor or industrial facilities have become a new order pool, widening the axis of competition among large contractors from housing brands toward construction references and power-infrastructure capability.

Outlook

The company's filed targets embed a smaller top line.

In a 6 February 2026 disclosure, GS E&C guided to 2026 consolidated revenue of KRW 11.5tn and new orders of KRW 17.8tn; for 2025, revenue of KRW 12.45tn came in 1.2% below the KRW 12.6tn forecast, while new orders of KRW 19.21tn exceeded the KRW 14.3tn forecast by 34.3%.

A company official said that with market uncertainty persisting, the firm would focus on risk management by taking orders mainly where costs can be controlled. Order intake is running ahead of that plan.

After KRW 5.22tn of new orders in 2Q26, first-half urban-redevelopment awards alone totaled KRW 7.47tn, including Seongsu Strategic District 1 (KRW 2.15tn), Gwangan District 5 in Busan (KRW 970.9bn) and the Seocho Jinheung apartment reconstruction (KRW 679.3bn).

On presales, first-half housing supply of 10,950 units already exceeded the full-year 2025 total of 8,858 units, and the annual presale target of 14,320 units was seen as achievable.

The new growth pillar, data centers, is tied to group plans: GS Group intends to build a 2.4GW AI data-center campus in the Bukpyeong No.2 industrial complex in Donghae, Gangwon, in two 1.2GW phases, with direct investment of KRW 30tn and total investment including compute equipment put at KRW 120tn.

In August 2026 the company also outlined cooperation with LS Electric to combine its EPC execution with power solutions from the early design stage, saying power-infrastructure competitiveness determines success in AI data centers.

These figures are capacity ambitions, however, and should be distinguished from amounts confirmed through actual contract disclosures.

Valuation

PER

23.6×

PBR

0.6×

ROE

2.8%

EPS

₩1,452

BPS

₩56,111

Dividend per share

₩500

The shares trade below book value per share, meaning they change hands at a discount to net assets. The earnings multiple, by contrast, sits above the band in which large Korean contractors have typically traded, because net profit attributable to owners over the last four quarters has been compressed.

Asset-based and earnings-based measures therefore send different signals, and the pace at which profit normalizes governs how the multiple should be read. Dividends have resumed, but the cash dividend yield itself is not high, so profit recovery and the falling debt ratio look more material than payout.

Broker views differ: Kyobo Securities maintained a target price of KRW 34,000 in a 30 July 2026 report, noting this was up from the KRW 24,000 the same house had set on 21 January 2026.

Daishin Securities set a target price of KRW 39,000 when initiating coverage in June 2026, forecasting 2026 revenue of KRW 11.36tn and operating profit of KRW 471.2bn (4.1% margin), and said the target was derived by applying a 0.65x target price-to-book multiple to 12-month forward book value per share.

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

Surging urban-redevelopment awards build a revenue queue

New orders of KRW 5.22tn in 2Q26 were up 61.7% year on year, and first-half urban-redevelopment awards alone reached KRW 7.47tn. Redevelopment awards take time to reach construction, but once secured they form a future revenue base.

The company said revenue should recover as newly supplied volume enters construction in stages. Because the intake is selective and concentrated in Seoul and the capital region, exposure to provincial unsold inventory is relatively contained.

Non-housing revenue growth and a data-center pipeline

In 2Q26, plant revenue rose 18.0% and infrastructure revenue 27.4% year on year, partly offsetting the housing gap.

Per Hana Securities material, data centers under way were won at roughly KRW 9-10bn per megawatt with construction periods of about two years; the Goyang project of 20MW at around KRW 180bn was targeted for completion in October 2026.

Data centers are cited as having shorter build periods than typical plant work, so revenue recognition ramps faster after groundbreaking. Adding possible captive group awards, this is a route to reducing housing dependence.

Improving balance sheet and cash flow

The debt-to-equity ratio fell from 262.5% in 2023 to 250.0% in 2024 and 234.2% in 2025. Operating cash flow also rose sharply to KRW 591.5bn in 2025 from KRW 267.8bn in 2024, against negative KRW 7.3bn in 2022. Consolidated equity stood at KRW 5.52tn at end-2025, of which KRW 4.79tn was attributable to owners. That matters as a buffer for the working-capital needs of a recovery in construction starts.

Bear factors

Shrinking revenue and weak bottom-line conversion

Quarterly revenue fell from KRW 3.208tn in 3Q25 to KRW 2.401tn in 1Q26, and 2Q26's KRW 2.779tn still did not regain the prior-year level. The company itself guided 2026 revenue to KRW 11.5tn, implying contraction.

More important is bottom-line conversion: 2025 operating profit of KRW 437.8bn exceeded 2024's KRW 285.9bn, yet net profit attributable to owners of KRW 93.5bn fell short of 2024's KRW 245.6bn. In 1Q26 and 2Q26, owners' net profit was effectively breakeven and KRW 2.6bn respectively.

Cost and regulatory burdens cap margin recovery

Commentary noted 2Q26 operating profit fell 43.63% year on year on continued cost pressure and a shrinking housing business, missing market expectations.

Analysis also described an environment in which government policy focused on curbing housing demand and tightening safety and labor rules lengthens schedules and raises costs, worsening project viability and funding burdens at the same time.

The quarterly operating margin has slipped from around 5% in 2Q-3Q25 to the 3% range in the first half of 2026. Even if starts increase, a simultaneous deterioration in cost ratios could delay the margin recovery path.

Gap between data-center expectations and contracted orders

The Donghae campus is still at the stage of group capacity ambition, and the contract value GS E&C would actually book is a separate matter.

In a 30 June 2026 article, Hana Securities analyst Kim Seung-jun forecast around KRW 1tn of awards covering some 120MW in the second half, and said that if the Donghae project proceeds, orders of 1.2GW and more than KRW 10tn could be envisaged.

Order timing, grid capacity and permitting nonetheless remain schedule variables. With expectations running ahead, the timing and size of actual order disclosures are the items to verify.

Risk factors

Housing cycle and unsold inventory

At end-October 2025, nationwide unsold housing was 69,069 units and post-completion unsold stock 28,080 units, both up month on month, prompting concern over builders' funding strain and regional property weakness.

Forecasts also pointed to continued polarization, with opposite price paths for the capital region and the provinces. Given the large housing weighting, weak presale rates can translate into provisioning and bad-debt burdens. The scale of the 2023 operating loss illustrates how large this risk can be.

Project financing and funding costs

The debt-to-equity ratio fell to 234.2% at end-2025 but remains well above 200%. Higher funding costs, project-financing restructuring and construction-cost burdens were cited as reasons orders are not converting into starts, with tighter lending screens keeping funding conditions restrictive.

Even with more redevelopment awards, delays in association-led projects can extend periods in which capital is tied up. Interest-rate direction and credit-spread moves are direct variables.

Project execution and reputation

In redevelopment work, groundbreaking can slip depending on association procedures and permitting. A 28 July 2026 report noted continuing controversy over commitments on early groundbreaking at Sangdaewon District 2 in Seongnam.

Safety and quality issues bear directly on brand strength and association choices, making them a precondition of the redevelopment order strategy. A schedule change in even one large project can affect quarterly revenue recognition.

What to watch next

Late October 2026
Provisional 3Q26 results disclosure. Whether building/housing revenue improves further from the KRW 1.537tn of 2Q26 and whether the quarterly operating margin moves above the 3% range is the first test of the recovery-in-starts thesis.
During 4Q 2026
Whether data-center order disclosures appear and at what size. Confirmed groundbreakings and contract values for planned projects such as Ilsan and Busan are needed before the group campus concept translates into a concrete revenue path.
Monthly from October 2026
Ministry of Land, Infrastructure and Transport data on housing starts, presales and unsold units. Whether post-completion unsold stock rises again bears directly on provisioning pressure in the housing division.
By December 2026
Whether the annual presale target is met. The company's full-year presale target is 14,320 units; after 10,950 units in the first half, whether the second-half schedule is delivered as planned shapes the 2027 revenue base.
Early February 2027
Full-year 2026 results and the guidance filing for 2027 revenue and new orders. The company disclosed annual guidance on 6 February 2026, so the direction in which targets are revised from the 2026 plan of KRW 11.5tn revenue and KRW 17.8tn new orders is the item to watch.

Overall view

GS E&C sits in a phase where earnings and order intake point in different directions.

On an annual basis, profit recovered from a KRW 387.9bn operating loss in 2023 to KRW 285.9bn in 2024 and KRW 437.8bn in 2025 (3.5% margin), while the debt-to-equity ratio fell from 262.5% to 234.2% - yet net profit attributable to owners of KRW 93.5bn in 2025 was below the prior year, so bottom-line conversion remains weak.

Quarterly revenue slid from KRW 3.208tn in 3Q25 to KRW 2.401tn in 1Q26, and 2Q26 revenue of KRW 2.779tn with operating profit of KRW 91.4bn did not regain the year-earlier level.

Conversely, 2Q26 new orders reached KRW 5.22tn, up 61.7% year on year, and first-half urban-redevelopment awards totaled KRW 7.47tn, building a queue of future revenue.

Adding to this, the group's plan for a 2.4GW AI data-center campus in Donghae, Gangwon - two 1.2GW phases with KRW 30tn of direct investment - has amplified debate over a non-housing growth pillar, though capacity ambitions must be distinguished from contracted amounts.

Ultimately, whether recovering starts convert into revenue without cost-ratio deterioration, and whether data-center expectations are confirmed by order disclosures, are the two axes that will separate the earnings paths ahead. This report is for information purposes and contains no buy or sell opinion or target price.

Sources

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

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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.