[Click eStock] "Hyundai Engineering & Construction Expected to Secure Nuclear Projects in the Second Half... 'Buy' Maintained"

"Long-term Prospects for Nuclear Power Plant Orders Remain Solid"

On August 4, SangSangin Securities lowered its target price for Hyundai Engineering & Construction from 215,000 won to 158,000 won while maintaining its "Buy" recommendation.

Jinbeom Kim, a researcher at SangSangin Securities, stated, "We have revised the target price by adjusting the EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization) multiple for the energy division down to 18.3 times and increasing the WACC (Weighted Average Cost of Capital) to 10.5%." He added, "However, we are maintaining a 'Buy' perspective as the long-term outlook for nuclear power plant orders remains intact."

The nuclear power project pipeline expected in the latter half of this year is drawing attention. Kim explained, "The Palisades SMR will leverage financial support from the U.S. Department of Energy to pursue partial contracts for early-stage design and infrastructure construction in the second half," adding, "While the Kozloduy nuclear power plant has faced delays due to a change in the local government, discussions are underway aiming to sign the second ESC contract in the second half." He further explained that for the "Fermi America Project," if a direct Power Purchase Agreement (PPA) is secured, partial contracts for preliminary work will likely be possible.

Hyundai Engineering & Construction's consolidated earnings for the second quarter exceeded market expectations. Revenue fell by 11.4% year-on-year to 6.8 trillion won, while operating profit rose 20.7% to 261.8 billion won. Kim attributed this to improvements in the construction and housing segments and cost ratio improvements at Hyundai Engineering, which more than offset the deteriorating cost ratios in the standalone plant and civil engineering segments.

Additionally, Hyundai Engineering saw positive impacts from cost improvements at its Poland plant site and increased building construction revenue from domestic affiliates. Subsidiaries such as Songdo Landmark City Phase 5 and Hyundai Steel Industries also contributed positively to the overall results.

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