"Up 893% This Year"... Stocks That Keep Rising Despite Surging Too Much [Weekend Money]

The stock prices of domestic construction companies have surged by as much as 10 times, but analysts say this is not a temporary phenomenon and is instead driven by structural competitiveness.

A bird's-eye view of a large nuclear power plant jointly promoted for global expansion by Hyundai Engineering & Construction and Westinghouse. Hyundai Engineering & Construction

On May 3, Eugene Investment & Securities stated in its report "Valuation Pressure, But It's Time to Focus on Direction" that the nuclear power competitiveness of domestic construction companies is expected to gradually expand.

Korean construction stocks soared on expectations of nuclear power plant orders. As of the closing price on April 28, Hyundai Engineering & Construction's stock was at 167,100 won, up 142.17% compared to the beginning of this year. Daewoo E&C surged 893.31% to 33,410 won over the same period.

Valuation pressure is mounting. Hyundai Engineering & Construction saw increased expectations for entry into the global large-scale nuclear power plant and small modular reactor (SMR) markets, based on its partnership with Westinghouse and others, while Daewoo E&C's stock price rose as its role as lead manager within Team Korea was reevaluated. In addition, news about Middle East reconstruction and investments in the United States have contributed to the rise in construction company stock prices. Share prices have reflected these expectations even before order achievements have materialized.

The key point is that the pipeline remains solid. Hyundai Engineering & Construction is facing uncertainty as securing clients for its large-scale U.S. nuclear power project has been delayed, but order achievements are expected to be realized as soon as business conditions are met. The Kozloduy project in Bulgaria is also expected to make headlines within the year, and there is a possibility of participation in the Team Korea project. Daewoo E&C is expected to achieve order results by completing negotiations on the construction costs of the Dukovany nuclear power plant in the Czech Republic within the second quarter of this year. The company also has additional order pipelines, including Ninh Thuan 2 in Vietnam and Temelin in the Czech Republic.

Ryu Taehwan, a researcher at Eugene Investment & Securities, advised, "The nuclear power momentum of domestic construction companies should be interpreted in terms of valuation from a mid- to long-term perspective."

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