[This Week's Focus Stock] BHI, Competitiveness Proven by New Orders

Surpassing 1 Trillion Won in New Orders for Two Consecutive Years... Stock Price Up 83% This Year
Global Electricity Demand Drives Continued Order Growth

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Shares of BHI, the largest domestic manufacturer of Heat Recovery Steam Generators (HRSG), have risen by 85% so far this year. On April 29, the stock hit an all-time high of 29,450 won during intraday trading. Following a record-breaking volume of new orders last year, the company is continuing to see rapid growth in new orders this year as well. With global electricity demand increasing and more projects aiming to replace coal-fired power plants, the outlook for future orders remains bright.

Proven Competitiveness in the Global HRSG Market

BHI is a company that designs, manufactures, installs, and constructs power plant equipment. Its main clients include Korea Electric Power Corporation and other power companies, power plant operators, major construction firms, and steelmakers. The company primarily manufactures various types of boilers, HRSGs, auxiliary equipment such as condensers, heat exchangers, and deaerators.

The HRSG, a core facility for LNG combined cycle power plants, recovers heat energy from the exhaust gas generated by gas turbines and converts it back into high-temperature, high-pressure steam to drive steam turbines. In 2020, BHI acquired all HRSG core technologies from Amec Foster Wheeler.

According to the '2024 HRSG Market Analysis' published by the power generation research firm McCoy Report, BHI supplied a total of 5,586 megawatts (MW) of HRSGs last year, ranking first in the engineering category based on market share. The engineering ranking evaluates the competitiveness among companies that possess original technologies. In the manufacturing category, BHI produced a total of 5,966 MW of HRSGs last year, making it the company with the highest number of HRSG orders worldwide. The manufacturing ranking is based on actual order performance.

Last year, BHI recorded new orders totaling 1.48 trillion won, the largest in its history. The company reported sales of 404.7 billion won, operating profit of 21.9 billion won, and net profit of 19.6 billion won for the year.

This year, the company has already achieved new orders worth 1.2 trillion won, surpassing the 1 trillion won annual order mark for the second consecutive year. Major projects ordered this year include: ▲Ammonia co-firing power generation vaporization facilities ▲Auxiliary equipment for Shin Hanul Units 3·4 nuclear power plants ▲HRSGs for the Luma2·Nairiyah2 and Rabigh2 combined cycle power plants in Saudi Arabia ▲HRSGs for a desalination power plant in Qatar ▲HRSGs for Hokkaido Electric Power's Ishikariwan Shinko Power Plant in Japan ▲Circulating Fluidized Bed Combustion (CFBC) boilers for a Philippine power company

BHI has succeeded in winning orders for a wide range of power generation facilities, including traditional thermal, LNG, nuclear, and ammonia co-firing, achieving balanced performance across all business divisions.

A BHI representative stated, "In the global trend of energy transition, LNG and nuclear power generation are emerging as the most prominent sectors," adding, "We expect BHI to continue benefiting from these trends."

Strong Order Momentum Continues This Year

Expectations for BHI are rising among analysts in Yeouido's financial district. IBK Investment & Securities estimated that BHI achieved consolidated sales of 135.4 billion won and operating profit of 8.9 billion won in the first quarter of this year. These figures are believed to have exceeded market expectations of 133.5 billion won in sales and 6.7 billion won in operating profit.

Kim Taehyun, a researcher at IBK Investment & Securities, said, "The company's performance likely improved as it recognized HRSG sales from the Saudi projects ordered in the first half of last year," adding, "The Duro Ma power plant project ordered in November last year will be reflected in second-quarter sales, while Luma2 & Nairiyah2 will be reflected in the third quarter, and Rabigh2 in the second half of the year."

On April 25, BHI signed a contract worth 517.7 billion won with San Miguel Global Power Holdings, a Philippine power company, to supply CFBC boilers. CFBC boilers are more environmentally friendly than conventional pulverized coal (PC) boilers. They have a wider fuel utilization range and, by burning additives such as limestone together, can reduce emissions of pollutants such as nitrogen oxides and sulfur oxides. Currently, the Philippines is planning large-scale CFBC boiler construction projects totaling about 6,000 MW. Researcher Kim explained, "In the Southeast Asian market, where natural gas and renewable infrastructure are lacking, demand for coal-fired power generation remains high," adding, "growth momentum is also forming in the previously sluggish boiler segment."

In February, BHI signed an HRSG supply contract worth about 293 billion won with Harbin Electric (HEI). Through HEI, the company is participating in ongoing combined cycle power plant projects in the Luma and Nairiyah regions of Saudi Arabia. There are a total of four projects, divided into Luma 1·2 and Nairiyah 1·2. The Luma2 and Nairiyah2 projects, which BHI won, are led by a consortium that includes JERA, Japan's largest power company.

The company explained that this strong order momentum is the result of BHI establishing its position in the Middle East by securing numerous successful references based on its outstanding technology. Last year alone, BHI won three major large-scale HRSG supply projects in Saudi Arabia: Taiba, Qassim, and Duro Ma.