Hyundai E&C Business Trends and Risk Monitoring — 2026-06-19

Key Business Changes and Risk Signals

• Expansion of Global Nuclear Project Opportunities: In 2026, Hyundai E&C is targeting major contract wins in global nuclear redevelopment and Middle East reconstruction projects. Specifically, the rising power demand from AI data centers is driving new investment in nuclear energy.

• Intensifying PF Guarantee Burdens: As of the end of September, Hyundai E&C's PF guarantee scale remains higher than its equity capital, indicating continued high risk exposure. Many of the non-started construction sites consist of non-residential projects, leading to high presale risks.

• Deteriorating Cost Ratios in Unsold Projects: Hyundai E&C’s cost ratio reached 97.91%. Accumulated financial costs and sluggish presales could heighten risks related to PF contingent liabilities and uncollected construction payments. Korea Ratings (KR) has identified this as a factor that could lead to a credit rating downgrade.

• Continued Credit Rating Observation: Korea Ratings is maintaining its observation of Hyundai E&C regarding PF-related matters, analyzing that a "red light" could appear for credit stability if there are unfavorable changes in the external environment.

Guarantee Risks and Subcontractor Issues

• Shaheen Project Construction Cost Friction: Hyundai E&C is facing friction with some subcontractors over "over-investment" in construction costs during the S-Oil Shaheen project.

• Declaration to Strengthen Subcontractor Support: Hyundai E&C, in partnership with the Korea Fair Trade Commission and the Korea Specialty Construction Association, has launched a significantly strengthened support program for subcontractors using a "166 billion won fund" and "AI technology." This aims to create a fair trading environment between prime and subcontractors.

• Improvements in Construction Subcontracting Practices: In 2026, the construction industry is working to resolve chronic conflicts, such as re-evaluating the appropriateness of mutual market entry between general and specialty construction firms and introducing a fair wage system linked to the craftsman grading system.

Market Analysis and Practical Insights

• Portfolio Shift from Urban Renewal to Complex Development: Following its Apgujeong reconstruction win, Hyundai E&C has secured the Wirye Bokjeong Station complex development project (worth over 3 trillion won), expanding its order structure from urban renewal-centered to complex development. This is part of a strategy to diversify large-scale projects.

• Note for Practitioners: Hyundai E&C is utilizing a newly established PF management team to mitigate PF risks. However, if sluggish presales and accumulated financial costs persist, pressure to fulfill guarantee obligations could intensify. In particular, the company must simultaneously manage issues regarding subcontractor liquidity crises and cost ratio deterioration caused by construction delays.

Note: Hyundai E&C's credit rating is currently under observation, and the PF guarantee scale continues to exceed the company's equity capital. There is a high possibility that the risk of fulfilling guarantee obligations will increase rapidly if presales for unsold projects are delayed.