Data Centers, End of War, and How Far Will Construction Stocks Go? | Kim Seung-jun, Hana Securities Research Center Research Fellow

Summary

Construction analyst Kim Seung-jun argues that Korean construction names are in an early AI data center cycle, with GS E&C as his top pick due to the Donghae 1.2GW project and DL E&C as a second choice on data center orders. He sees the recent construction pullback as mechanical and believes current levels are attractive. He also names public budget beneficiaries among small/mid builders.

• AI data center construction is early-stage, and Korean contractors are capable because of plant, power and nuclear experience.
• Data center projects depend on available site and power; cost is secondary, so speed is the key issue.
• GS E&C is the top pick because GS group's Donghae data center project could represent over 10 trillion won of construction revenue.
• DL E&C is the second preference after announcing about 2 trillion won of H2 data center order targets.
• Recent construction stock declines were mostly mechanical profit-taking, not fundamental deterioration.
• Government budget confirms public-sector supply and favors public-order builders such as Kumho, Kyeryong, Hanshin and Dongbu.
• Low-utilization coal plants may run to support data center power, with carbon concerns temporarily secondary.