Daishin Securities on the 25th maintained a Buy rating on KEPCO E&C, saying expansion of nuclear plant design revenue is expected, and raised its target price to 215,000 won from 200,000 won. As of the previous trading day, KEPCO E&C closed at 161,600 won.
Heo Min-ho, an analyst at Daishin Securities, said, "KEPCO E&C is the only domestic design firm that has worked on 33 nuclear power plant construction projects over the past 50 years," and noted, "When Korea Electric Power Corporation and Korea Hydro & Nuclear Power Co. (KHNP) carry out engineering, procurement and construction (EPC) for the U.S. AP 1000 and Small Modular Reactor (SMR), we can expect mid- to long-term top-line growth such as winning integrated design orders and expanding overseas exports of Korean-type nuclear plants, along with a strong operating leverage effect."
Heo analyzed that if Korea Electric Power Corporation and KHNP are in charge of construction of the reactor and turbine buildings for the AP 1000 plants and EPC for auxiliary equipment, KEPCO E&C's integrated design order amount would reach 280 billion won for every two reactors.
He also said that if they are responsible for construction of the reactor building and EPC for the turbine building and auxiliary equipment, the integrated design is estimated at 700 billion won.
He said, "Although a decline in revenue related to the completion of Saeul Units 3 and 4 is expected, if the existing Shin Hanul Units 3 and 4 at 90 billion–100 billion won and the Czech Dukovany Units 5 and 6 at 100 billion won are added, nuclear project design revenue is expected to expand."
Meanwhile, last year KEPCO E&C posted revenue of 518.8 billion won and operating profit of 31.7 billion won. That represents decreases of 8.9% and 55.4%, respectively, from a year earlier. Heo forecast this year's results at 591.7 billion won in revenue and 75.6 billion won in operating profit.