[Weekend Money] A 160 Trillion Won Nuclear Jackpot Looms... This Company Emerges as a Key Team Korea Partner

Agreement Reached on U.S. Investment in Eight Large Nuclear Units
Additional Orders Anticipated in Czech Republic, Vietnam, and Beyond
Major Project Orders in LNG Sector Also Imminent

There are forecasts that Daewoo Engineering & Construction will see simultaneous improvements in both performance and corporate value, bolstered by expectations of winning nuclear power plant and liquefied natural gas (LNG) project orders. In particular, as Daewoo E&C’s competitiveness as a ‘Team Korea’ construction partner for major U.S. nuclear power plant projects is being spotlighted again, securities firms have raised their target stock prices.

According to NH Investment & Securities on September 12, the company maintained its ‘Buy’ rating on Daewoo E&C while raising its target price by 15%, from 26,000 won to 30,000 won. Given the closing price of 19,750 won on September 10, the day before the target price hike, this indicates an upward potential of about 52% to reach the target set by securities companies.

The key factor behind the upward revision of the target price is the strong expectation of nuclear power plant and plant project orders. NH Investment & Securities evaluated that the prospects for Korean firms exporting nuclear power plants have increased, as investment in eight large-scale nuclear units for the United States was included in the investment agreement. Considering that the project cost per nuclear unit is about USD 15 billion, the total project value for eight units amounts to around USD 120 billion.

Lee Eunsang, a researcher at NH Investment & Securities, stated, “Daewoo E&C is set to participate as the chief builder in the Team Korea consortium for the new nuclear project in the Czech Republic.” With only three domestic construction firms left who qualify to lead nuclear projects, and taking into account competitors’ business priorities, it is seen as highly likely that Daewoo E&C will also join additional nuclear export projects to the United States and Vietnam as a Team Korea construction partner.

Particularly, the analysis suggests that Daewoo E&C’s competitive advantage could stand out further as the Korean government clarifies its involvement in U.S. nuclear projects. Daewoo E&C was designated as the lead contractor for the Czech nuclear power project, Korea’s first nuclear export deal since the Barakah project in the United Arab Emirates in 2009. NH Investment & Securities explained that, unlike competitors with their own independent nuclear project structures, Daewoo E&C is based on the Team Korea model, which means the company could be re-rated as Korea’s role in the U.S. project becomes clearer.

The LNG business is also being cited as a new growth engine. Daewoo E&C is the only Korean builder with a record of leading an LNG liquefaction project, and is one of just seven global firms with such experience. As final investment decisions (FID) in the LNG sector have accelerated in the wake of the recent war, Daewoo E&C’s competitiveness in this market is being emphasized once again.

Order intake is also becoming more visible. In its second quarter results announcement, Daewoo E&C raised its annual new order target by 50%, from 18 trillion won to 27 trillion won. Major order pipelines include the 5 trillion won Dukovany Nuclear Power Plant in the Czech Republic, 3 trillion won Papua New Guinea LNG, 5 trillion won New Airport in Gadeokdo, and fertilizer and Mozambique Rovuma LNG projects in Nigeria and Mozambique respectively.

Notably, for the Papua New Guinea LNG project, Daewoo E&C received a notice of preferred negotiation status as the sole prime contractor for the central processing facility (CPF) and the engineering, procurement, supply, construction, and commissioning (EPSCC) of well pads. For the Mozambique Rovuma LNG project, Daewoo E&C participated in the consortium selected as the main contractor for the EPC of the liquefaction plant and associated facilities.

Performance recovery is also expected to kick off in earnest. Researcher Lee predicted, “Daewoo E&C’s sales this year will reach 8.23 trillion won, with operating profit at 868 billion won, marking a turnaround from last year’s operating loss of 815.4 billion won. Third-quarter operating profit is also forecast to exceed market expectations, rising 230% year-on-year to 186.5 billion won.”

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