Kiwoom Securities on the 20th projected that nuclear power orders will ramp up in earnest starting this year for Hyundai Engineering & Construction, maintaining a Buy rating and a target price of 214,000 won. The previous session's closing price was 177,000 won.
Shin Dae-hyeon of Kiwoom Securities said, "Starting this year, full-fledged nuclear power orders are expected, and construction will begin at a limited level," adding, "Given that the company has prime contractor capabilities in both Small Modular Reactor (SMR) and large nuclear projects, the valuation premium will persist."
On earnings, it is expected to swing to a profit, posting 173.4 billion won in operating profit in the first quarter. Shin said, "Building institutional sector revenue will likely decline due to fewer housing starts, but as high-cost sites in the dwellings institutional sector reach completion, the gross margin will improve," adding, "In the plant institutional sector, one-off gains from design changes (VO) will also be reflected."
Risks in the Middle East are assessed to be limited in impact. Shin said, "The effects of the Middle East war appear limited in the first quarter," adding, "We secured key materials for major sites in advance, and we have also secured alternative procurement routes for major equipment."
The momentum for nuclear power orders is also gradually becoming visible. The fastest project is cited as two Palisades SMRs in the United States, with orders expected in the second quarter. However, Fermi America's Matador project is analyzed to face a funding issue, pushing it to the fourth quarter, and Bulgaria's Kozloduy units 7 and 8 are likewise expected to shift to EPC in the fourth quarter.
However, some projects may see phased orders depending on licensing and expense variables. Shin added, "For the Palisades SMR and Matador projects, because approval by the U.S. Nuclear Regulatory Commission (NRC) is not yet complete, only partial orders focused on site clearing or support facilities may proceed first," adding, "For Kozloduy units 7 and 8 as well, due to construction cost negotiations, some processes may be tendered separately."