Korea Investment & Securities Co. on the 29th raised its target price for Hyundai Engineering & Construction, reflecting expectations for small modular reactor (SMR) orders and Middle East reconstruction projects. It maintained its investment opinion at "Buy," and lifted the target price to 194,000 won from the previous 159,000 won. The previous trading day's closing price was 167,100 won.
Earlier, Hyundai Engineering & Construction said it posted consolidation revenue of 6.2813 trillion won and operating profit of 180.9 billion won in the first quarter of this year. The figures were down 15.8% and 15.3%, respectively, from a year earlier. However, operating profit beat market expectations by 7.9%.
Kang Kyung-tae, an analyst at Korea Investment & Securities Co., said, "The plant institutional sector's cost ratio fell 7 percentage points from the fourth quarter of last year to 90.4%, reflecting one-off gains," and noted, "In addition, the dwellings cost ratio fell to as low as 90.3%, contributing to strong results."
As investment points going forward, SMR orders and Middle East reconstruction projects were presented. Kang said, "Holtec International in the United States has applied to the Nuclear Regulatory Commission (NRC) for a limited work authorization (LWA) for two SMRs to be built at the Palisades site," adding, "If approved, a formal EPC contract is expected to be signed in late June to early July."
He added, "Because speed is critical for Middle East reconstruction projects, a negotiated contract under a 'cost plus fee' method is also being considered by leveraging Hyundai Engineering & Construction's existing completed sites."