Hyundai Engineering & Construction (Hyundai E&C) has secured a $5 billion contract to build a petrochemical complex for Aramco’s Amiral project in Saudi Arabia. The South Korean builder’s shares rose by 6.3% at 40,800 won ($31.17) after it announced the deal, which is more than 60% of its 2023 target of KRW10.7 trillion for new contract wins.
Positive Reactions to the Contract
The contract has raised hopes that Korean peers could secure more orders overseas, with analysts estimating that Korean builders could secure a combined $13.7 billion of new contract wins overseas during the first half of 2023, up 14% from the same period a year earlier.
Seoul-based EBEST Investment & Securities analyst Seryeon Kim said that Hyundai E&C’s latest deal is positive news for the company, but cautioned that its impact on Hyundai E&C’s stock price could be limited since the market had already factored in much of it since obtaining a letter of award for the project in April.
Key Details of the Contract
Aramco’s new complex will be integrated into its existing refinery in Jubail under the $11 billion Amiral project to produce 1.65 million tons of ethylene and other industrial gases annually. The contract is a major win for Hyundai E&C, which will earn KRW6.554 trillion from the project.
Conclusion
Hyundai E&C’s latest contract win in Saudi Arabia has helped boost the company’s shares and given hope to Korean builders looking to secure more orders overseas. While analysts estimate a positive outlook for Korean builders, they caution that the impact on Hyundai E&C’s stock price may be limited due to already factoring in much of the news since April.
