[Edaily Reporter Shin Ha-yeon ] On the 28th, NH INVESTMENT & SECURITIES projected that GnCenergy Co., Ltd.(119850)would see a full-scale structural supply shortage in the large-scale emergency generator market as domestic artificial intelligence data centers (AIDCs) enter a gigawatt (GW)-level expansion cycle starting in 2028. The analysis suggests that, given the recent rapid growth in the order backlog, the market may already be pricing in earnings growth beyond 2028, which could lead to further stock re-rating. No specific investment opinion or target price was provided.

Mok Jin-won, an analyst at NH INVESTMENT & SECURITIES, stated, “It is certain that the large-scale emergency generator market will enter a phase of structural supply shortage following the GW-scale expansion of domestic data centers starting in 2028,” adding, “The surge in the order backlog is expected to serve as a catalyst that will lead to a stock price re-rating by preemptively reflecting 2028 earnings.”

GnCenergy Co., Ltd., established in 1989, is South Korea’s leading company specializing in the design, procurement, and construction (EPC) of emergency generators. It supplies emergency generators ranging from 200 kilowatts (kW) to 5,200 kW to meet customer requirements. Last year, sales to data centers accounted for 76.5% of its emergency generator business.

In particular, gas turbine emergency generators—which are recently being introduced in AIDCs—offer higher unit prices and margins than conventional diesel emergency generators, and GnCenergy Co., Ltd. holds a dominant position in the domestic market for gas turbine emergency generators for data centers.

The domestic AIDC market is projected to enter a full-scale expansion phase in 2028–2030, following the commissioning of facilities ranging from tens to hundreds of megawatts (MW) in 2026–2027. The company explained that large-scale projects—including GS Holdings’ 1.2 GW project, SK Hyper’s 5 GW project, and Naver’s 1 GW-class project—are scheduled to be completed simultaneously.

A simple aggregation of the publicly stated targets of the seven major operators indicates that cumulative new supply is projected to reach around 10 GW by 2031 and over 20 GW by 2035. The average annual net increase alone is expected to be at least 1–2 GW. However, factors such as securing large-scale power supplies, project financing (PF), the timing of graphics processing unit (GPU) adoption, and whether anchor tenants can be secured were cited as variables that will determine the actual start of construction and the timing of operations.

Researcher Mok explained, “The unit of discussion in the market, which was limited to ‘tens of MW’ just two to three years ago, has now completely shifted to the ‘GW’ level,” adding, “Given that major players with strong capital—including the three major telecom companies, GS Holdings, Naver, Samsung SDS, and NHN—are simultaneously pursuing aggressive expansion, the outlook for domestic AI infrastructure supply over the next few years is very bright.”

This expansion of data centers is expected to lead to increased demand for large-scale emergency generators. Large emergency generators used in data centers typically have a capacity of 2.5 to 5.2 MW per unit. GnCenergy Co., Ltd.’s maximum annual production capacity (CAPA) for large emergency generators is approximately 250 units; the company shipped about 70 units last year and is expected to ship 90 to 100 units this year.

Researcher Mok noted, “If the construction cycle from 2028 to 2030—during which new data centers totaling an average of 1–2 GW per year are set to be completed—gains full momentum, market demand for generators will easily exceed the company’s CAPA of 250 units,” adding, “It is becoming a foregone conclusion that the domestic emergency generator market will enter a phase of structural excess demand starting in 2028.”

The company has also devised a plan to address the physical limitations of its production capacity. If domestic production capacity reaches its limit, the company plans to utilize emergency generators from Boduang, a subsidiary of China’s Weichai. By conducting testing directly in China and then importing the units into Korea, the company avoids being constrained by the production capacity of its domestic factory.

Accordingly, analysts estimate that supply capacity can be expanded to a level of “250 units + α,” which combines the existing annual production of 250 units with the volume imported directly from China.

Researcher Mok explained, “We are free from the physical constraints of domestic factory capacity,” adding, “By adding the volume imported directly from overseas to the current production capacity of 250 units, we can achieve a flexible supply of ‘250 units + α.’” He further predicted, “This will act as a key momentum that significantly opens up the upside potential for earnings by allowing the company to fully absorb the market’s surging excess demand into its order book without any bottlenecks.”

He also highlighted the growth in the order backlog. GnCenergy Co., Ltd.’s order backlog, which stood at approximately 400 billion won at the end of last year, is projected to increase by about 50% to 600 billion won by the end of this year, driven by the recent surge in new orders. As the order backlog grows rapidly, visibility into earnings growth beyond 2028 is expected to improve.

Earnings growth is expected to accelerate further starting next year. NH INVESTMENT & SECURITIES estimated GnCenergy Co., Ltd.’s revenue for this year at 306.7 billion won and operating profit at 42.1 billion won. For next year, the firm projected revenue to reach 410.3 billion won—a 33.8% year-over-year increase—and operating profit to rise 78.2% to 75.0 billion won. Revenue and operating profit are forecast to expand to 512.9 billion won and 102.3 billion won, respectively, by 2028.

Although the stock price has already reached the upper end of its historical valuation range, the firm left open the possibility of further re-rating. GnCenergy Co., Ltd.’s historical price-to-earnings ratio (PER) ceiling is approximately 15 times.

Analyst Mok noted, “Based on traditional cyclical standards, this could be a point where multiple pressures come into focus,” but added, “When comprehensively considering the structural excess demand driven by explosive capacity expansion in the Chonbang AIDC market, the visibility of earnings growth based on rapidly accumulating order backlogs, and strong market sentiment, the likelihood of a sustained decline in the stock price is extremely limited.”

He further noted, “Rather, we view this as a phase in which the market is recognizing the structural improvement in fundamentals and preparing for an additional valuation re-rating.”