[Run Again K Construction] GS Geonseol Sweeps Urban Renewal... Also Pursuing Future Growth Opportunities

Panoramic view of 'Banpo Xi' apartment in Banpo-dong, Seocho-gu, Seoul (Photo by GS Construction)

[Asia Economy Reporter Ryu Tae-min] GS Engineering & Construction (GS E&C) is proving its capabilities by achieving remarkable success in urban renewal orders despite the downturn in the construction market. In addition, new orders have reached the highest level since the company's founding, and new businesses, regarded as future growth engines, are on track to achieve sales of 1 trillion KRW.

GS E&C secured new orders worth 12.447 trillion KRW through the third quarter of this year. This is the largest achievement since its establishment in 1969, surpassing the total orders of 12.411 trillion KRW for the entire year of 2020 within just three quarters of this year.

Detailed performance indicators also stand out. GS E&C, leveraging its apartment brand Xi, has exceeded 6 trillion KRW in orders solely in the urban renewal sector, including reconstruction, redevelopment, and remodeling. As of the end of October, starting with the selection as the construction company for the Ichon Hangang Mansion reconstruction project located in Ichon-dong, Yongsan-gu, Seoul, and recently the redevelopment project in Seongnam Shinhung 1 District, GS E&C has secured a total of 15 urban renewal projects, recording orders worth 6.3492 trillion KRW. The company expects to reach 7 trillion KRW by the end of this year.

By type of renewal project, there are 6 reconstruction projects, 7 redevelopment projects, and 2 remodeling projects. By region, orders were secured mainly in major cities with high project stability such as Seoul, Gyeonggi, Busan, Daejeon, and Daegu. Looking at the order status by region, GS E&C was selected as the construction company for 8 projects in Seoul alone, accounting for about 47% of the total orders, amounting to 2.9835 trillion KRW. This is the highest order amount achieved in the industry based on Seoul's urban renewal projects. This was followed by Gyeonggi (1.4203 trillion KRW), Busan (909.7 billion KRW), Daejeon (478.2 billion KRW), and Daegu (355.3 billion KRW).

GS E&C's apartment brand Xi is regarded as the best premium apartment brand currently available in Korea. According to the ‘2022 Best Apartment Brand’ survey conducted jointly by Real Estate R114 and Korea Research, Xi ranked first overall. Notably, it has held the top spot for two consecutive years, including last year, and has been recognized as the best brand by winning first place five times in the past six years. GS E&C stated, "The recent success of Xi, which maintains a single brand while positioning itself as a high-end brand in the industry, is deeply meaningful."

Xi's popularity is also increasing day by day online. The application operated by Xi has surpassed 1 million users, and its YouTube channel subscribers are approaching 600,000. This is an overwhelming number one among construction company brands.

Opening the Era of 1 Trillion KRW in New Business Orders, Future Growth Engine

GS E&C is also leading the discovery of new businesses as future growth drivers. New businesses, spearheaded by global water treatment company GS Inima and European modular housing leader Danwood, are growing rapidly. In the third quarter alone, new business sales exceeded 700 billion KRW, aiming for 1 trillion KRW by the end of the year. New orders alone reached 1.2 trillion KRW.

GS E&C, judging that sustainability cannot be guaranteed solely by existing orders and contract-based construction business, has a policy to rapidly increase the proportion of new businesses. In addition to water treatment, the company has expanded into modular construction, solar power, and lithium-ion battery recycling.

Modular construction is a technology that assembles buildings like Lego blocks, where most of the building's basic framework, electrical wiring, ondol (underfloor heating), and housing materials are pre-manufactured in factories and assembled on-site. This minimizes on-site work, reducing construction time by 20-50%, and is environmentally friendly due to less noise, dust, and waste during construction.

GS E&C officially entered the business by acquiring overseas modular companies such as Danwood in Poland and Elements in the UK in early 2020. The modular market has been mainly formed in advanced countries where securing construction labor is difficult and wages are high, but recently, the company has focused on the fact that this market is growing domestically due to aging population, labor shortages, and stricter environmental requirements. Domestically, GS E&C is actively promoting the domestic wooden modular housing business under the brand Xi Geist.

A panoramic view of the Chungbuk Eumseong plant completed last year by GPC, GS Construction's precast concrete manufacturing subsidiary. Currently, PC is being supplied to numerous sites including large logistics centers, semiconductor factories, and underground parking lots.

Expanding Eco-Friendly New Businesses such as Recycling and Smart Aquaculture

Additionally, GS E&C completed a GPC factory on a 150,000㎡ site in the Central General Industrial Complex in Eumseong-gun, Chungcheongbuk-do, capable of producing 120,000㎥ of PC components annually. The PC method involves prefabricating concrete structures such as slabs, columns, beams, and walls in a factory and assembling and installing them on-site.

The company has also begun full-scale entry into the lithium-ion battery recycling market, a secondary battery recycling business. It established its energy materials subsidiary Enerma and is constructing a secondary battery recycling plant in the Battery Recycling Regulatory Free Zone within the Yeongilman 4 General Industrial Complex in Pohang. This business involves collecting used secondary batteries, physically crushing them, producing black powder (a black mass containing lithium, cobalt, nickel, manganese, etc., obtained by finely shredding and heat-treating batteries), and extracting secondary battery material metals through a wet smelting process. Enerma plans to invest about 100 billion KRW initially and start commercial production from 2023.

Alongside this, GS E&C is expanding eco-friendly new businesses through smart salmon aquaculture. Currently, a ‘Smart Aquaculture Testbed’ is being constructed on a site of about 67,000㎡ within the Pukyong National University Fisheries Science Research Institute, consisting of one basement floor and two above-ground floors. It is scheduled for completion in 2023 and will have the capacity to produce 500 tons of Atlantic salmon annually from 2025. The system reuses over 99% of the breeding water and uses a closed-loop filtration method. Seawater is drawn in and purified through water treatment technology to raise salmon, and polluted aquaculture water is also reprocessed, making it environmentally friendly. GS E&C explains that this resolves issues such as microplastics, heavy metals, and viruses that cause environmental pollution in conventional cage aquaculture, enabling the production of safe and clean seafood.

A GS E&C official said, "While strengthening the foundation of existing businesses such as the construction and housing sector led by Xi competitiveness, we plan to actively promote new businesses to prepare future growth engines. Through stable profit generation and proactive investment for the future, we will grow into a leading sustainable company in Korea."