On the 21st, construction stocks were broadly higher in early trading. With the Middle East war dragging on, buying gathered on expectations that Korea's construction sector will benefit from reconstruction projects.
As of 9:52 a.m., Daewoo Engineering & Construction was trading at 31,750 won, up 3,650 won (12.99%) from the previous session on the Korea Exchange. At the same time, Sangji Construction was up 800 won (7.37%) at 11,650 won.
GS Engineering & Construction (7.10%) and Taeyoung E&C (4.19%) were also on the rise.
NH Investment & Securities projected that orders related to nuclear power and the Middle East will reach $140 billion over the next three years, creating order momentum comparable to 2010–2014.
Lee Eunsang of NH Investment & Securities said, "The core plant hubs that domestic builders have established through accumulated orders geographically align with the main strike points of this conflict," adding, "Korea is expected to secure practical order competitiveness based on schedule compliance and on-site project management (PM) capabilities, between China's low-price bidding strategy and Europe's source-technology edge."
She also said that as the risk of a Hormuz Strait blockade materializes due to the U.S.-Iran war, additional investment is expected, centered on western development and alternative pipelines. Specifically, she analyzed there is a high likelihood of accelerating additional investment and execution focused on the Gulf of Oman (south) and the Red Sea (west), with potential investment reaching $70 billion.
It picked Hyundai Engineering & Construction as the top pick and GS Engineering & Construction as the second favorite.
The researcher said, "Hyundai Engineering & Construction is expected to secure an edge in order competitiveness based on the retention of plant and nuclear power personnel," adding, "GS Engineering & Construction is boosting expectations for its nuclear business by participating in nuclear bids in Vietnam and Saudi Arabia, and at the current share price its price-to-book ratio (PBR) is 0.7 times, making its valuation attractive."