Samsung C&T Construction Division Daily Risk Monitoring — 2026-06-01

1. Key Business Developments and Risk Signals

Orders/Contracts/Construction Progress

• Securing the Shinbanpo 19th & 25th Reconstruction Contract (440 billion KRW): On the 30th, Samsung C&T won the contract for the Shinbanpo 19th and 25th reconstruction project in Seocho-gu. In the final bidding against POSCO E&C, Samsung C&T utilized its industry-leading credit rating (AA+) to offer differentiated financial terms, including unlimited project funding at the lowest interest rate, 100% LTV for relocation loans, and zero HUG guarantee fees.

• Specialized Design and Commitment to Guaranteed Completion: Samsung C&T proposed a design maximizing Han River views for over 87% of households under its "Raemian Illucera" brand. The company also shifted its strategy to provide a guaranteed completion commitment, as requested by the union in its bidding guidelines. Its financial health has turned this commitment into a key competitive advantage.

• Risk Signals (PF/Financial/Legal Disputes): None reported. No public disclosure risks (debt increases, deteriorating PF structures, or legal disputes) regarding Samsung C&T’s construction division have been identified over the past week.

2. Guarantee and Subcontracting Management Issues

Subcontracting Payments and Cost Issues

• Abolition of Retention Funds and Increase in Subcontracting Unit Prices: On the 28th, the construction industry agreed to abolish retention funds—long considered a chronic industry issue—and 19 construction companies (including Samsung C&T) agreed to increase supply prices by 134.3 billion KRW. They also decided to remove unfair special clauses that shifted industrial safety costs onto subcontractors, moving toward better protection for subcontractors.

Guarantee Insurance Risk

• Samsung C&T Funding Without HUG Guarantees (Leveraging AA+ Credit Rating): For the Shinbanpo project, Samsung C&T proposed terms that allow for funding "without the need for Korea Housing & Urban Guarantee Corporation (HUG) guarantees." Its financial strength, backed by an industry-leading credit rating, is effectively lowering guarantee insurance risks related to advance payments and contract performance guarantees.

Items for Verification

None.

3. Strategic Analysis and Partnership Opportunities

Potential Business Opportunities

• Expansion of Reconstruction/Urban Renewal Projects: Following the success at Shinbanpo, Samsung C&T is increasing its chances of winning additional reconstruction projects in key Seoul areas such as Apgujeong, Yeouido, and Mok-dong. Its specialized financial terms and guaranteed completion commitment are enhancing trust with unions, which is expected to lead to more bidding opportunities.

Portfolio Changes vs. Competitors

• Securing Financial Superiority Over POSCO E&C: In the Shinbanpo bidding, POSCO E&C focused on cash support (e.g., 200 million KRW support for union members), but Samsung C&T’s financial terms—backed by its overwhelming AA+ credit rating—were chosen for providing long-term project stability. Samsung C&T has solidified its competitive edge to continue expanding its urban renewal portfolio.

Major Changes Since Yesterday

• Shinbanpo 19th & 25th Reconstruction Contractor Confirmed (General Meeting on the 30th): Samsung C&T was officially selected as the contractor at the general meeting held at the Seoul National University of Education Cultural Center in Seocho-gu at 2 PM yesterday. The integrated proposal combining the union’s requested completion guarantee with low-interest financing was the decisive factor.

Reporting Basis: As of 2026-06-01, focusing on information released between 2026-05-31 and 2026-06-01. Disclosures and media reports have been verified.