KB Securities said on the 13th that earnings at Hyundai Engineering & Construction will continue to rise on the back of the global nuclear power cycle. It kept its "Buy (BUY)" rating and raised its target price to 218,000 won from 170,000 won. The previous trading day's share price of Hyundai Engineering & Construction was 155,700 won.
Kang Min-chang, an analyst at KB Securities, said, "A company likely to lead the supplier-favored structure in an unprecedentedly strong and closed nuclear renaissance," adding, "The rapid share-price rise early in the year may feel burdensome, but there is sufficient basis to eventually surpass the past valuation peak."
Kang cited past cases of valuation re-ratings for engineering, procurement and construction (EPC) corporations and said Hyundai Engineering & Construction is currently in a value re-rating phase. He explained, "After Korean, Japanese and European EPC corporations enjoyed shared benefits during the Middle East plant boom in the mid-2000s to early 2010s, stock declines centered on Korean EPC corporations occurred due to market stagnation and cutthroat competition," adding, "In contrast, global corporations continued a long-term share-price uptrend amid the LNG project cycle."
In particular, the outlook is that corporations will undergo value re-ratings by directly benefiting from the nuclear cycle in a supplier-favored market. Kang said, "This nuclear cycle will be stronger and more closed than the past LNG EPC cycle, when valuation premiums were taken for granted," and noted, "We need to consider a new valuation." Hyundai Engineering & Construction's past valuation peak is a 12-month forward price-to-book ratio (PBR) of 2.3 times.