"Hyundai E&C Secures Large-Scale Nuclear Orders, Target Price Raised"[Click e-Stock]

On April 21, IBK Securities maintained its "Buy" investment rating on Hyundai Engineering & Construction and raised its target price from 195,000 won to 260,000 won.

Jung Hyun Cho, a researcher at IBK Securities, stated, "Profitability is expected to be maintained despite the Middle East war," and added, "Winning large-scale nuclear power plant projects will demonstrate the company's valuation." For Hyundai Engineering & Construction's first quarter performance this year, he estimated sales at 6.7 trillion won and operating profit at 171 billion won. He also highlighted that the biggest concern for Hyundai Engineering & Construction's current stock price is the Middle East war, explaining, "The Middle East accounts for about 13% of the order backlog and less than 20% of sales. Although most ongoing sites are operating normally, some sites may be affected by logistics issues in the Strait of Hormuz, which could increase cost burdens."

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However, he viewed the impact as limited. Cho explained, "The short-term impact on profit and loss will remain limited, considering the availability of alternative logistics routes and contingency funds," and added, "Given the force majeure clause in the contracts, the construction company is not required to unilaterally bear the cost burden; rather, it can negotiate with the client for schedule extensions and cost compensation."

Meanwhile, he predicted that major project orders for Hyundai Engineering & Construction would begin after the second quarter. "Key pipelines such as the Palisade Small Modular Reactor (SMR), an electric arc furnace steel mill in the U.S., Bokjeong Station area development, and the Papua New Guinea LNG project are expected to be normally ordered in the second quarter," he said.

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