[Click e-Stock] "Hyundai E&C's Nuclear Order Backlog Could Reach 39 Trillion Won Next Year... Target Price Raised"

Target Price Raised by 7.5% Compared to Previous Estimate

On November 24, KB Securities raised its target price for Hyundai Engineering & Construction from 93,000 won to 100,000 won, anticipating that the company's nuclear power order backlog could increase to as much as 39 trillion won next year. The investment rating was maintained at 'Buy'.

Jang Moonjun, a researcher at KB Securities, stated, "The target price has been raised by 7.5% compared to the previous estimate, taking into account changes in the earnings forecast period. While there are concerns about performance through the first half of next year, by 2026, Hyundai Engineering & Construction will prove why it is considered a nuclear power stock. The current order backlog, which stands at only 1.8 trillion won, could increase to 39 trillion won by 2026. The commencement of nuclear power plant construction will fundamentally change the company's valuation methodology." He added, "Hyundai Engineering & Construction is KB Securities' top pick in both the nuclear power and construction sectors for next year."

Starting with the groundbreaking of the Palisades small modular reactor (SMR) project in the United States in the first quarter of next year, additional groundbreaking is expected for the Fermi nuclear power plants (units 2-4) in the United States and two new nuclear power plants in Bulgaria in the second and third quarters. Jang commented, "For Hyundai Engineering & Construction to be clearly recognized as a nuclear power stock, it is essential to secure actual project orders and commence construction, and that inflection point is finally approaching." He continued, "The reason why orders and groundbreaking are so important is not only because they signify the realization of nuclear power projects, but also because from the moment construction begins, it becomes possible to specifically assess the value of Hyundai Engineering & Construction's nuclear power business."

While expectations for the nuclear power business drove the stock price higher in the first half of this year, Hyundai Engineering & Construction has yet to secure any substantial overseas nuclear power orders or groundbreaking cases. Jang explained, "As a result, efforts to quantify the value of the nuclear power business have so far lacked persuasiveness, but if the first overseas nuclear power plant groundbreaking becomes a reality, it will finally be possible to estimate project-by-project revenue and profit, and thereby derive a concrete business value for the nuclear power segment."

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