[Click eStock] Why KEPCO Engineering & Construction Raised Its Target Price but Maintained a Neutral Investment Rating

[Asia Economy Reporter Ji Yeon-jin] Shin Young Securities announced on the 30th that it has raised the target price for KEPCO Engineering & Construction from the previous 53,000 KRW to 84,000 KRW, increasing the earnings per share (EPS) forecast as new nuclear power plant orders are expected to increase this year. However, the investment rating was maintained at neutral.

Researcher Kwon Deok-min of Shin Young Securities stated, "From a valuation perspective, the current stock price already reflects expectations," adding, "To resolve uncertainties, attention should be paid to the confirmation of orders. Accordingly, the investment opinion on the company remains neutral."

The company is expected to record sales of 80.5 billion KRW in the first quarter of this year, a 1.3% increase compared to the previous year, and an operating profit of 4.5 billion KRW, turning to profitability. Sales in the nuclear power and reactor sectors are continuously declining as the construction of Shin-Kori Units 5 and 6 is nearing completion. On the other hand, since the fourth quarter of last year, sales have been recognized in the energy new business sector, including the Jeju Hallim Offshore Wind Power and Hanju Gas Combined Cycle Power EPC projects, recording 57.4 billion KRW, a 108.7% increase compared to the previous year.

Jeju Hallim and Hanju Gas Combined Cycle Power are scheduled for completion in November 2023 and the end of February 2025, respectively, and it is analyzed that the energy new business sector may offset the declining nuclear/reactor sales. Researcher Kwon said, "The importance of nuclear power is being reemphasized both domestically and internationally," adding, "Domestically, work to resume construction of Shin-Hanul Units 3 and 4 is accelerating, and overseas, nuclear-related projects in the Czech Republic and Poland are progressing smoothly."

The Czech order project schedule plans to select a preferred negotiator in 2023 and a final operator in 2024. Accordingly, the company aims to obtain European operator certification this year and plans to submit a bid in June.

This content was produced with the assistance of AI translation services.