On the 10th, KB Securities recommended DL E&C as its top choice for the first half of 2025. This comes thanks to collaboration with the U.S. company X-Energy, which is leading the competition in the standardization of small modular reactors (SMRs). Accordingly, KB Securities maintained its investment opinion of a Buy on DL E&C and raised the target price from 53,000 won to 63,000 won, an increase of about 18.9%.
According to KB Securities, DL E&C's current market capitalization is 1.7 trillion won, with net cash at around 1 trillion won. Considering this year's operating profit guidance of 520 billion won, it can be explained that the potential benefits from SMR standardization have hardly been reflected in the corporate value.
Jang Moon-jun, a researcher at KB Securities, noted, "Investing in DL E&C can be regarded as 'an opportunity to buy SMR standardization call options for free,'" adding, "The collaboration with X-Energy has not been reflected at all in the stock price. This partnership could provide DL E&C with long-term investment appeal."
Furthermore, Research Institute Jang stated, "Due to the unfavorable housing market conditions and excessively passive management stance, DL E&C has been neglected in the stock market for a long time," and added, "With the guidance of 520 billion won in operating profit for 2025, concerns about performance are expected to ease, revealing potential growth factors that have gone unnoticed until now."
DL E&C has been cooperating with X-Energy as an engineering, procurement, and construction (EPC) partner since the early stages. DL E&C invested $20 million in January 2023 to acquire X-Energy's convertible bonds. In addition, it is jointly promoting SMR EPC projects in Norway, Indonesia, and elsewhere. This background suggests that beyond future order possibilities, the standardization of SMRs could lead to continuous benefits from subsequent projects.