[Click eStock] "Hyundai Construction, Expectations for Growth in Traditional Nuclear Power Plants and SMR... Target Price Raised"

On the 11th, KB Securities raised the target price for Hyundai Engineering & Construction from 41,000 KRW to 45,500 KRW, describing the company as "competitive in both traditional large-scale nuclear power plants and small modular reactors (SMR)." The buy rating was also maintained.

On the same day, KB Securities analyst Jang Moon-jun stated, "We raised the target price by 11% compared to the previous one, reflecting a slight upward revision of the return on equity (ROE) due to a decrease in the cost of equity and changes in earnings estimates." He added, "Although the recent accident at the consolidated company and its potential negative impact are regrettable, we do not believe it structurally changes the investment points for the first half of the year."

In the first half of this year, the stock price is likely to be sensitive to factors such as nuclear power and SMR, the end of the war in Ukraine and reconstruction projects, and the possibility of improved inter-Korean relations. The recent stock price has risen more than 30% since the earnings shock and aggressive guidance (company's own earnings forecast) presented on January 22.

KB Securities particularly focused on nuclear power exposure. Analyst Jang analyzed, "Through collaboration with global companies in both traditional large nuclear power plants and next-generation SMRs, Hyundai Engineering & Construction is building a foundation for continuous orders rather than one-off contracts."

In traditional large nuclear power plants, collaboration with Westinghouse is key. Analyst Jang said, "The transition to the second phase EPC (Engineering, Procurement, and Construction) for Units 7 and 8 of the Kozloduy Nuclear Power Plant in Bulgaria is expected to take place this year," adding, "On the 3rd of last month, it was reported that they jointly won the feasibility study for the Kr?ko Nuclear Power Plant Unit 2 project in Slovenia."

In the SMR sector, they plan to start construction within the year on a 3.5-generation SMR project at the Palisades nuclear power plant site in collaboration with the US-based Holtec.

Analyst Jang noted, "Holtec is better known as a waste management and maintenance company rather than a nuclear technology company, but it holds sites previously used for nuclear power plants." He added, "The 3.5-generation SMR is advantageous in terms of licensing, and with Hyundai Engineering & Construction’s construction and financial support backing it, it is important to closely watch the performance in the SMR sector."