NH Investment & Securities said Doosan Enerbility(034020) is likely to see policy momentum in the domestic and overseas nuclear power industries continue until just before the U.S. midterm elections. It said orders could begin to increase in earnest from next year based on the competitiveness secured in the large nuclear and small modular reactor (SMR) markets. The firm maintained a "buy" rating and a target price of 133,000 won. The previous session's closing price was 80,700 won.
On the 26th, Lee Min-jae, an analyst at NH Investment & Securities, said in a report that "policy momentum will continue at home and abroad until just before the U.S. midterm elections, and valuation attractiveness compared with global competitors has also increased."
In the United States, not only the federal government but also State Governments, public institutions, and private corporations are investing in nuclear power. The U.S. Department of Energy (DOE) is pushing to build 10 large nuclear reactors, and State Governments and private corporations are drawing up plans to introduce SMRs. In Korea, discussions have begun on adding nuclear power plants in light of increased medium- to long-term power demand stemming from the "three mega projects." In Europe, the Middle East, and Southeast Asia, there are early moves to build new nuclear plants.
Another business pillar of Doosan Enerbility, gas turbines, is also seen as having strong growth potential centered on North America. With power demand from North American big tech corporations operating artificial intelligence (AI) data centers continuing, demand is also expected to grow in Korea due to fuel switching and large-scale projects. In the second half of this year, the company is also expected to decide whether it will secure new customers, including North American utilities (power and gas suppliers).
NH Investment & Securities also highlighted Doosan Enerbility's corporate value compared with global competitors. The average 2030 EV/EBITDA multiple for global gas turbine companies is 18 times, a higher level than Doosan Enerbility's. It added that, in particular, valuations can differ by more than double depending on the share of North American business.
The analyst cited ample backlogs and proven profitability as reasons global competitors receive higher valuations. Doosan Enerbility also has about 50 gigawatts (GW), more than half of the large nuclear and SMR projects that can be ordered by 2030, concentrated in North America, and the share of North American business in gas turbines is likewise expected to grow. The increase in high-margin service revenue was also viewed positively.
Upcoming milestones could also support the share price. It expected a series of nuclear-related events before the U.S. midterm elections, including a high-level meeting on the South Korea–U.S. nuclear agreement, the first investment announcement in the United States, the draft of the 12th Basic Plan for Electricity Supply and Demand, and a nuclear agreement between the United States and Saudi Arabia.
However, it added that depending on the outcome of the U.S. midterm elections, share price volatility could increase in the short term.