[Asia Economy Reporter Park Hyungsoo] Orbitech is showing strength. Securities firms' forecasts that the company will grow despite poor performance seem to have influenced the stock price. On the 15th, President-elect Yoon Seok-yeol visited the wildfire damage site in Uljin, Gyeongbuk, and said, "To revive the local economy, we will start construction of Shin Hanul Nuclear Power Plant Units 3 and 4 as soon as possible to enable many people to work." Since officially announcing his presidential candidacy, Yoon has raised nuclear power competitiveness as a key issue, including holding a meeting with Professor Joo Han-kyu of Seoul National University's Department of Nuclear Engineering as his first public external schedule.
At 9:42 a.m. on the 16th, Orbitech was trading at 7,660 won, up 7.13% from the previous day.
Kyobo Securities analyzed Orbitech as "returning to its good old days."
Orbitech operates in the nuclear power and aircraft precision parts businesses. The nuclear power business provides radiation management and other service operations to maintain the integrity of nuclear power plants and nuclear fuel processing facilities. The IS division offers inspection services for nuclear power plant equipment and structures. Strict qualification requirements are necessary to operate in the nuclear power business, which act as entry barriers. The aircraft precision parts business mainly manufactures and supplies Bulkhead structures for Boeing's 737 models. Last year, the company recorded sales of 77.9 billion won and operating profit of 10 billion won. Sales increased by 46% compared to the previous year, and operating profit turned positive.
Kim Han-kyung, a researcher at Kyobo Securities, explained, "Expectations for the rollback of the nuclear phase-out policy have risen after the presidential election," adding, "The nuclear power business forms a market of about 190 billion won annually."
He continued, "The market is oligopolized by five to six small companies, and Orbitech is expected to benefit from a rebound in the nuclear industry," adding, "Orbitech holds a 14.6% market share in radiation management services, ranking second, and a 20% share in pre-operation and mid-term inspection services, ranking first."
Furthermore, he said, "Orbitech has secured contracts related to Hanul, Kori, and Shin-Kori nuclear power plants," and analyzed, "The government's nuclear phase-out policy led to the cancellation of construction for six nuclear reactors and a ban on life extension for ten reactors." He predicted, "With the resumption of new nuclear power plant construction permits and overseas nuclear power exports, the order environment will improve."
Researcher Kim also analyzed, "The aviation business, which had been sluggish due to COVID-19, will enter a normalization trajectory," noting, "Aviation business sales have sharply declined over the past two years."
He emphasized, "With the introduction of Korean Air's 737 Max models and the recovery of travel demand, order recovery is expected," and added, "Sales are expected to return to 2019 levels within the next two to three years."
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