Hyundai E&C Business Trends and Guarantee Risk Monitoring — 2026-08-03

Key Business Changes and Risk Signals

• Order Backlog Hits 100 Trillion Won: In Q2 of this year, Hyundai E&C recorded 22.8 trillion won in new orders, surpassing a 100 trillion won backlog for the first time in company history, securing approximately 3.8 years of work.

• H1 Operating Profit of 442.7 Billion Won, Up 20.7% YoY: Operating profit increased compared to the previous year, driven by improved cost ratios in the housing division and an expansion of profit-centered businesses.

• Nuclear Contract Delays Intensify: On the 3rd, Eugene Investment & Securities stated, "Despite overwhelming order achievements, we have lowered the target price from 178,000 won to reflect that the commercialization speed of the US nuclear power project (Small Modular Reactor, SMR) is slower than expected."

• H2 Expansion Plans for New Businesses: Leveraging improved housing cost ratios, Hyundai E&C is pushing to expand orders in growth sectors including AI data centers, nuclear power, and Liquefied Natural Gas (LNG) in the second half of the year.

• Rise in Accounts Receivable: IBK Securities, while acknowledging Hyundai E&C's earnings recovery, highlighted the trend of increasing accounts receivable as a economic signal and subsequently lowered its target price.

Guarantee Risks and Subcontractor Issues

• Ulsan Shaheen Project Settlement Friction: Hyundai E&C is experiencing friction with some subcontractors over "over-investment" in construction costs during the S-Oil Shaheen project. Additional construction cost settlements are expected to be a variable for H2 performance.

• Cost Spikes and Subcontracting Pressure Due to Middle East Conflict: As costs soar for the top 19 construction firms due to the Middle East conflict, they have signed "win-win agreements" with subcontractors. Currently, adjusting unit prices remains difficult due to remaining linkage cycles, and some subcontractors are unable to even request increases for fear of losing business.

• Caution Regarding Subcontractor Payments and Guarantee Insurance: With the expansion of Hyundai E&C's large-scale projects, the scale of transactions with subcontractors is growing, increasing the potential for payment delays and disputes over construction cost increases. Verification is required.

Market Analysis and Practical Insights

• Diversified Order Portfolio Compared to Competitors: Hyundai E&C is expanding its portfolio from traditional housing and architecture into new growth sectors like AI data centers, nuclear power, and LNG, indicating a structural improvement against economic volatility.

• Potential Delay in 2028 Credit Rating Upgrade Goal: Although Hyundai E&C presented a "2028 credit rating upgrade goal," analysts point out that the nuclear contract delays and increasing accounts receivable trends could negatively impact credit evaluations.

• Significant Changes from Previous Day: Investor sentiment is cooling following consecutive downward adjustments to target prices. The speed at which new businesses like nuclear power and AI data centers translate into "realized cash flow" has emerged as the core variable for stock price recovery.

Data Source and Reliability: This report is based on public disclosures and media reports from the 24 hours prior to 2026-08-03 (after 2026-08-01). Information older than two weeks has been excluded, and specific financial figures are cited only as stated in their respective sources.