Hana Securities said on the 1st that GS Engineering & Construction is poised to benefit from the government's artificial intelligence (AI) data center investment announcement and could win orders measured in gigawatts (GW). It maintained its investment rating at "buy" (BUY) and raised the target price 15.6% to 52,000 won from 45,000 won. The previous session's closing price was 25,100 won.
Kim Seung-jun, an analyst at Hana Securities, said, "Among the three mega projects released by the government, GS Holdings' 2.4GW investment is included in the AI data center sector," and noted, "Group affiliate GS Engineering & Construction and subsidiary Xi C&A already have extensive experience building data centers, so the chances of winning orders for this project are very high."
GS Group plans to complete an AI data center with a total capacity of 2.4GW in Bukpyeong 2nd Industrial Complex in Donghae, including 1.2GW (phase 1) by 2028 and 1.2GW (phase 2) by 2029. To that end, it is fleshing out the business plan, including establishing a subsidiary, "GS AI Infrastructure," under GS Holdings.
In particular, a coal-fired power plant (1.2GW) operated by GS Donghae Power, a subsidiary of GS E&R, is located in Donghae, and observers say significant synergies are expected on the power supply side.
GS Engineering & Construction and consolidated subsidiary Xi C&A are currently carrying out three data center projects in Goyang, Paju and Sejong. In the second half of this year, it plans to break ground on two additional projects in Ilsan and Busan. The ongoing data centers were secured at 9 billion–10 billion won per megawatt (MW), with construction periods of about two years.
By major project: ▲ Goyang data center (20MW, about 180 billion won) is slated for completion in Oct. this year; ▲ Paju data center (50MW, about 320 billion won) targets completion in Jun. next year. ▲ Sejong data center (phases 2–3, 80MW) is underway at 525.9 billion won. If orders are secured for the Ilsan (80MW) and Busan (40MW) data centers scheduled for the second half of this year, the company is expected to record new orders totaling 120MW and nearly 1 trillion won in the second half alone.
Kim said, "Compared with general plants or power stations, data centers have shorter construction periods, which means revenue is recognized much faster," adding, "Once the Donghae AI data center project gets into full swing, we can look for ultra-large orders exceeding 10 trillion won for the total capacity of 2.4GW."
Hana Securities estimated that the Donghae phase 1 and 2 projects could allow annual revenue recognition of 2 trillion–5 trillion won from 2028 to 2030.
Kim explained, "Since the 2010s, GS Engineering & Construction has steadily built more than 10 data center references, including LG Uplus, Hana Financial Group, and Naver (Chuncheon, Sejong)," adding, "Recently, it has expanded the business to areas where it invests equity directly to develop and operate projects."
He added, "If orders for the Donghae project exceeding 10 trillion won begin contributing to revenue within two to three years, the company's overall revenue growth will accelerate at a standout pace."