Yuanta Securities stated on July 28 that, although there is a global surge in demand for large-scale nuclear power plants and Small Modular Reactors (SMRs), Doosan Enerbility needs to demonstrate greater pricing power in the core nuclear equipment sector and deliver profitability that exceeds expectations in order to further enhance its corporate value. The investment opinion remains 'Buy' with a target price of 81,000 KRW.
In the second quarter of this year, Doosan Enerbility reported consolidated sales of 4.6 trillion KRW, a 10% increase compared to the same period last year, and operating profit of 271.1 billion KRW, a 12% decrease. While sales exceeded market expectations, the operating profit margin was 5.9%, falling short of the market expectation of 7.0%. Sales from the Enerbility division, which has a high correlation with the stock price, increased by 25% year-on-year. This was driven by both last year's orders and the commencement of revenue recognition from four Middle Eastern gas power projects, worth a total of 3.4 trillion KRW, contracted earlier this year.
Jang Yunseok, a researcher at Yuanta Securities, commented, "New orders in the first half reached 3.8 trillion KRW, up 98% year-on-year, achieving 35% of this year's annual target of 10.7 trillion KRW. On the surface, the results may not appear remarkable. However, considering the possibility that the contract amounts for core nuclear equipment for the Czech nuclear power plant (3.8 trillion KRW) and SMR modules (500 billion KRW), both scheduled for the second half, may be revised upward from previous estimates, there is potential to exceed the annual target."
Jang added, "Based on the rapidly increasing global demand for large-scale nuclear power plants and SMRs, the company's order backlog is expected to surge from 16 trillion KRW last year to 34 trillion KRW in 2029. Securing orders that can provide insight into future performance will become especially important in the second half of the year."
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