"Daewoo E&C Raises Order Target to 27 Trillion Won... Target Price Up"[Click e-Stock]

KB Securities Raises Daewoo E&C Target Price to 21,000 Won

On August 4, KB Securities raised its target price for Daewoo Engineering & Construction from 20,000 won to 21,000 won, while maintaining its "Buy" investment rating. The increase comes as the company has raised its annual order guidance.

Jang Mongjun, a research analyst at KB Securities, commented, "There is short-term investment appeal in the fact that Daewoo Engineering & Construction significantly raised its annual order guidance on the back of solid results," adding, "However, to achieve a stock performance similar to that of the first half, tangible results in the nuclear power plant business outside of the Czech Republic will be necessary."

For the second quarter of this year, Daewoo Engineering & Construction posted consolidated revenue of 2 trillion won (down 10.1% year-on-year) and operating profit of 232.3 billion won (up 182.6% year-on-year), significantly surpassing market expectations. Although the plant division's cost-to-sales ratio was weak due to a re-construction issue at a site in Nigeria, the construction division benefited from a favorable cost-to-sales ratio including one-off gains (80 billion won), and there were no significant one-off losses in selling, general and administrative expenses.

KB Securities has raised Daewoo Engineering & Construction’s annual order guidance from 18 trillion won to 27 trillion won. While orders in the first half amounted to only 7 trillion won, the projection takes into account the possibility of contracts being awarded in the second half, including the Gaduk New Airport project, the Czech Dukovany nuclear power plant project, and projects in Papua New Guinea, Nigeria, and Mozambique.

As Daewoo Engineering & Construction has increased its corporate value as a nuclear energy play, securing additional business opportunities is expected to have a major impact on the company's share price trajectory. Jang noted, "The reason South Korea’s large-scale nuclear power plant construction capabilities are recognized globally is due to experience in completing large-scale nuclear plants overseas, not just domestically," adding, "This experience has been the background for direct partnerships between foreign engineering firms and a select group of Korean construction companies, going beyond the simple Team Korea consortium."

He further stated, "Daewoo Engineering & Construction is now on the verge of securing a new overseas project—the Czech project—as a member of Team Korea," emphasizing, "The priority should be to ensure perfect execution of this first major step."

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