GS Engineering & Construction Expands Project Wins to Data Centers and Nuclear Power Plants; RFHIC to Benefit from Communications Component Shortage [Stocktopia]

[Financial News] Here is a summary of reports from major securities firms as of the morning of September 16.
GS Engineering & Construction is expected to improve both its earnings and stock valuation based on its expanded project pipeline, including the construction of the East Sea AI Data Center and possible participation in a U.S. nuclear power plant project.
RFHIC was assessed as likely to continue its earnings growth, supported by strong defense exports and an expected shortage of communications components next year. L&F is expected to swing to a loss in the third quarter, but its sales volume is projected to increase through new customers even after accounting for Tesla’s supplier diversification.
◆ GS Engineering & Construction (006360)— Shinhan Investment & Securities / Research Fellow Kim Sun-mi
— Target price: 47,000 won (up 23.7%; previously 38,000 won) | Previous closing price: 37,800 won
— Investment rating: Buy (maintained)
Shinhan Investment & Securities raised its target price for GS Engineering & Construction to 47,000 won, saying the company’s earnings and stock valuation would rise together as it expands its project pipeline from housing into data centers and nuclear power plants.
Researcher Kim Sun-mi analyzed, "In the short term, the amount of AI data center orders and whether the company participates in the Team Korea bid for U.S. nuclear power projects will determine the stock’s upside potential. Although next year’s earnings may fluctuate depending on the amount of orders recognized, earnings improvement will gradually become more concrete, supported by the expansion of the project pipeline from housing to data centers and nuclear power plants."
The immediate key variable is the 100-megawatt East Sea AI Data Center. It is currently undergoing a building-permit review, with approval targeted for September and construction scheduled to begin in November. Once construction starts, company-wide earnings in the following year and in 2028 could rise by 3% to 5%, the report said. In addition, new presales are expected to reach 15,000 units as of September, exceeding the annual plan, which should accelerate the improvement in operating profit from the second half of next year.
The report also said the stock remains inexpensive despite its recent rise. Researcher Kim said, "Despite the recent increase in the share price, the current price-to-book ratio (PBR) is around 0.6 times, representing a discount of more than 20% compared with competitors. The valuation gap will narrow as the construction schedules for major projects become more concrete."
◆ RFHIC (218410)— Hana Securities / Researcher Kim Hong-sik
— Target price: 150,000 won (maintained) | Previous closing price: 49,350 won
— Investment rating: Buy (maintained)
Hana Securities maintained its 150,000-won target price and Buy rating for RFHIC, saying strong defense exports are continuing while the possibility of a shortage of communications transistors next year is increasing. Although short-term buying also appears promising, the report judged that a long-term investment through the end of the year is particularly attractive.
Researcher Kim Hong-sik analyzed, "The earnings improvement of RF Materials, a consolidated subsidiary, is expected to continue in 2027 following 2026. Given the order trends, strong defense exports are likely to continue for the time being. The possibility of a frequency auction taking place in South Korea in 2027, following the United States, has also increased."
The basis for expectations in communications is the competition for physical AI. As connections among AI, networks, and robots become more important, new frequency allocations and investments in communications networks could increase, particularly in advanced countries. The United States has already confirmed a frequency auction for April next year, while the need to expand 5G frequencies is also being discussed in South Korea. Researcher Kim said, "Ultimately, competitiveness in AI, networks, and robotics is highly likely to determine the performance of physical AI."
Component supply was also identified as an earnings variable. Researcher Kim explained, "RFHIC is highly likely to post results above market expectations in 2027 as well, because a typical supply-shortage situation is expected: market demand is growing while the number of suppliers is declining." The report said the withdrawal of Dutch semiconductor company NXP Semiconductors from the communications business will reduce competition, while frequency auctions will increase demand. Since communications-equipment companies’ stock valuations were higher than expected during previous supply shortages, RFHIC could also be revalued alongside earnings growth next year.※ Gallium nitride (GaN)A next-generation semiconductor material that withstands higher voltage and heat than conventional silicon while reducing power loss. It is widely used in applications that handle strong radio waves, such as signal amplifiers in communications base stations and defense equipment such as radar systems.※ 5G standalone mode (5G SA)A method of building a communications network using only 5G equipment rather than relying on an existing 4G (LTE) network. Because it can fully deliver 5G’s inherently fast response times, it is advantageous for physical AI services such as robotics and autonomous driving. To deploy it, telecommunications companies must install new base-station equipment and components.
◆ L&F (066970)— NH Investment & Securities / Researcher Joo Min-woo
— Target price: 160,000 won (up 23.1%; previously 130,000 won) | Previous closing price: 114,700 won
— Investment rating: Buy (maintained)
NH Investment & Securities raised its target price for L&F to 160,000 won, saying sales volume will increase through new supply channels even if Tesla diversifies its cathode-material suppliers.
The key point is that the firm actually raised its sales-volume forecast for next year and beyond. Even assuming that L&F’s share of Tesla-bound supplies falls from 100% to 65% next year, its forecast for nickel-cobalt-manganese cathode material sales was increased because of new direct deliveries of 4680 batteries and two additional North American customers: Rivian and the Hyundai Motor Company–LG Energy Solution joint venture.
Lithium iron phosphate cathode material (LFP cathode material) was also presented as a medium- to long-term growth driver. Researcher Joo said, "As all three major South Korean battery makers are actively seeking LFP supplies independent of China, visibility has increased regarding the acquisition of new customers beyond Samsung SDI, which has already been secured." Although L&F faces financing pressure because of its unstable financial structure while expanding LFP production capacity from 60,000 tons next year to 90,000 tons in 2028, the report judged that the earnings improvement from expanding LFP will outweigh the impact of equity dilution.
For the third quarter, however, the company is expected to swing to a loss, with sales of 966.2 billion won and an operating loss of 11.6 billion won, falling below market expectations. Researcher Joo Min-woo explained, "The main reason is the sharp appreciation of the won." Because L&F exports in U.S. dollars, a decline in the won-dollar exchange rate, meaning a stronger won, reduces both sales and profit. Nevertheless, Joo expects cathode-material sales volume to increase 2% from the previous quarter and set another quarterly record.※ Nickel-cobalt-manganese cathode material (NCM cathode material) and lithium iron phosphate cathode material (LFP cathode material)These are two types of cathode material, a key battery component that stores electricity. NCM has high energy density and is used in electric vehicles with long driving ranges. LFP is inexpensive and stable, so it is mainly used in entry-level electric vehicles and energy storage systems (ESS).※ 4680 batteryA cylindrical battery measuring 46 millimeters in diameter and 80 millimeters in height. It is a next-generation format pioneered by Tesla. Its defining feature is a larger size than conventional cylindrical batteries, increasing the storage capacity of each unit.

[email protected] Min-seo Sung Reporter