Samsung Securities said on the 11th that KEPCO E&C has begun to reflect revenue from services for the Dukovany nuclear power plant in the Czech Republic and that effective order growth is continuing as construction of two large nuclear plants and one small modular reactor (SMR) has been finalized. It maintained its investment opinion at Buy and its target price at 220,000 won. The previous trading day's closing price was 173,600 won.
Samsung Securities explained that KEPCO E&C's revenue in the first quarter of this year rose 17.5% year over year to 113.3 billion won, falling short of consensus. In contrast, operating profit surged 11.8 times from a year earlier to 14.1 billion won, handily beating market expectations.
As revenue from services for large nuclear plants, including the Dukovany plant in the Czech Republic, increased, profitability appears to have improved as construction revenue decreased with completion of the Indonesia gas engine power plant engineering, procurement and construction (EPC) project approaching.
Kim Young-ho, an analyst at Samsung Securities, said, "Under the 11th Basic Plan for Electricity, bidding for the construction of two large nuclear plants and one SMR is expected to take place by next year at the latest," and predicted, "Considering KEPCO E&C's average order size from the currently under-construction Saeul Units 3 and 4 and Shin-Hanul Units 3 and 4, new nuclear projects are also expected to secure orders equivalent to 6%–8% of total project costs."
Kim added, "There is also room for the main contract to be signed for the Wando Geumil offshore wind project, for which pre-commencement services are currently underway."