Hanwha Investment & Securities said on the 11th that if KEPCO E&C delivers results in the global nuclear power generation market, it could break above the top end of its valuation. The firm maintained a Buy rating and raised its target price to 210,000 won from 135,000 won. KEPCO E&C's previous session closing price was 160,000 won.
Song Yu-rim, an analyst at Hanwha Investment & Securities, said, "From this year, expectations for KEPCO E&C's entry into the global nuclear power market are being reflected in the share price," adding, "If entry into overseas nuclear markets outside 'Team Korea' becomes visible, it could surpass the past valuation ceiling of a price-to-book ratio (PBR) of 10.2 times in September 2010."
KEPCO E&C signed a memorandum of understanding (MOU) with HanmiGlobal in June last year and, in January this year, entered into a three-party strategic alliance agreement with HanmiGlobal and Turner & Townsend in the United Kingdom. The analysis noted that there is a need to pay attention to additional cooperation news related to this.
Song said, "In the current phase where the nuclear power momentum (upside potential) is being reflected, it is better to focus on the strength of the beneficiaries rather than the valuation level."
Meanwhile, KEPCO E&C posted sales of 518.8 billion won and operating profit of 31.7 billion won last year. Sales fell 8.9% and operating profit dropped 55.4% from a year earlier.
Song said, "Sales declined year over year due to a revenue gap from the imminent completion of the Indonesia engineering, procurement and construction (EPC) project, delays in securing the Czech nuclear order, and delays in the domestic Shin-Hanul Units 3 and 4 schedule," adding, "With the Czech nuclear contract in December last year and the offshore wind contract for Wando Geumil in February this year, a gradual recovery is expected starting this year."