LS Securities said on the 13th that although KEPCO E&C's results were weak last year, a dramatic rebound is possible this year. It raised its target price to 190,000 won from 150,000 won and maintained a "buy" rating. KEPCO E&C's closing price in the previous trading session was 147,600 won.
On a consolidation basis in the fourth quarter last year, KEPCO E&C posted revenue of 205.5 billion won, up 7% from a year earlier, and operating profit of 22.6 billion won, down 16%. Revenue was solid, but operating profit fell significantly and was weak.
Sung Jong-hwa, an analyst at LS Securities, said it was "the impact of a decline in system design revenue due to reduced system design progress for Saeul Units 3 and 4, and a decline in new energy business revenue due to the completion of projects such as the Jeju Hallim offshore wind farm and Indonesia PLN gas engine power plant."
However, growth could emerge this year. LS Securities estimated KEPCO E&C's revenue this year at 621.8 billion won, up 20% from a year earlier, and operating profit at 66.3 billion won, soaring 109%.
The analyst said, "A recovery in progress rates for major design projects, recognition of preliminary design revenue for Dukovany Units 5 and 6 (about 100 billion won), and orders for renewable EPC (engineering, procurement and construction) projects will affect earnings growth."
He added, "The domestic and overseas nuclear power markets are very favorable, and long-term growth potential is strong," and said, "KEPCO E&C is the top-tier representative nuclear power stock and one that investors should buy for the long-term growth trajectory of the domestic and overseas nuclear power markets."