"Daewoo E&C Posts Solid 2Q Results...Nuclear Performance Key for Stock"[Click e-Stock]

Fourfold Surge in Two Months Followed by 60% Correction

"Further Gains Depend on Delivering Results in the Nuclear Sector"

Daewoo Engineering & Construction is expected to report solid results for the second quarter of this year. The company’s stock price has been driven by expectations for nuclear power plant orders, which has led analysts to emphasize the importance of meaningful achievements in the nuclear sector.

On July 23, KB Securities maintained its target price of 20,000 won and its ‘Buy’ investment opinion for Daewoo Engineering & Construction, based on this outlook. The previous day’s closing price was 15,270 won.

Since rising more than fourfold from February to the end of April, Daewoo Engineering & Construction’s stock price has corrected by nearly 60%. Although strong performance is expected for two consecutive quarters, and there are catalysts such as orders for LNG (liquefied natural gas) construction in the second half, the view is that additional achievements in the nuclear sector are needed for the stock to regain momentum.

For the second quarter of this year, consolidated sales are projected at 2 trillion won, with operating profit expected to reach 158 billion won. Compared to the same period last year, sales are expected to decrease by 12.0%, while operating profit is expected to increase by 92.2%. The improvement in profit despite the decline in sales is attributed to the recovery in profit margins within the residential and architecture division. KB Securities estimates the gross profit margin of the residential and architecture division at 14% for the second quarter. The absence of any significant one-off losses is also anticipated to contribute to the stability of earnings.

There is analysis that for Daewoo Engineering & Construction to be fully recognized again as a nuclear power stock, it must deliver tangible achievements in the nuclear sector. The global recognition of Korea’s large-scale nuclear power plant construction capabilities is due not only to domestic experience but also to successful completion of large overseas projects. This experience has led to partnerships between Korean builders and overseas technology companies such as Westinghouse, Holtec, and NuScale, extending beyond ‘Team Korea.’ Minchang Kang, a KB Securities research analyst, explained, “Daewoo Engineering & Construction is now on the verge of securing new orders for the Czech project, a business outside of Korea. The priority is to ensure that the first step is executed flawlessly through successful project delivery.”

This content was produced with the assistance of AI translation services.