[Click e-Stock] "Hyundai Engineering & Construction Raises Target Price on Nuclear Power Expectations"

Target Price Raised to 139,000 Won
"Higher Valuation Than in the Past Is Justified"

On February 5, Kiwoom Securities raised its target price for Hyundai Engineering & Construction to 139,000 won, reflecting strong market expectations for nuclear power, while maintaining its investment rating of "Buy."

Hyundai Engineering & Construction posted operating profit of 118.8 billion won in the fourth quarter, swinging to a profit from a year earlier and beating both the market consensus of 106 billion won and Kiwoom Securities' estimate of 97.6 billion won. One-off gains and one-off expenses were both reflected in the housing and building division of Hyundai Engineering & Construction. Shin Daehyun, an analyst at Kiwoom Securities, said, "Although consolidated revenue is expected to decline this year due to a contraction in the housing and building division of Hyundai Engineering & Construction and in the scale of Hyundai Engineering, we expect profit growth to still be achievable thanks to an improvement in the gross profit margin (GPM) at both Hyundai Engineering & Construction and Hyundai Engineering, driven by the completion of high-cost projects."

Shin also said, "This year is expected to be when nuclear power orders materialize in a tangible way," adding, "As the world's No. 1 nuclear power plant constructor, Hyundai Engineering & Construction deserves a higher valuation than in the past now that expectations for nuclear power have risen." He explained, "We are raising our target price by adding the Finland project to our nuclear power estimates and by taking into account the recently higher valuations of global nuclear power competitors."

He also elaborated on nuclear power-related updates confirmed in Hyundai Engineering & Construction's fourth-quarter results. First, the order value for the Palisades nuclear power plant project in the United States is expected to be around 5 trillion won, which is similar in scale to Kiwoom Securities' estimate. In addition, the Bulgarian nuclear power generation operator is preparing a notification letter from the European Commission regarding state subsidies for its construction plan, so approval is expected to take some time. Shin added, "Accordingly, Hyundai Engineering & Construction is understood to be in discussions to separate and secure orders in advance for certain auxiliary facility works." He went on to say, "Assuming nuclear power plants are built sequentially, Hyundai Engineering & Construction can conservatively build around 10 units, and this figure, on an EPC (engineering, procurement and construction) basis, mostly consists of large-scale nuclear power plants, with some small modular reactors (SMRs) included."

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