[Click eStock] "KEPCO E&C Expected to Benefit from U.S. SMR Market Expansion"

Expectations for Overseas Orders and Domestic Policy Benefits

There are expectations that KEPCO Engineering & Construction (KEPCO E&C) will benefit from the United States' policy to expand small modular reactors (SMRs). Since Korea is also aiming to introduce commercial SMRs, there is analysis suggesting that additional government policies could further boost growth prospects.

On June 13, KB Securities provided this analysis regarding KEPCO E&C. The previous day, KEPCO E&C's stock price surged by 25.6% to close at 89,700 won. Other nuclear-related stocks also saw significant gains, including KEPCO KPS (+13.9%) and Doosan Enerbility (+6.8%).

The news that U.S. SMR design company Oklo received approval from the U.S. Department of Defense to install a small reactor at an Air Force base in Alaska acted as a positive catalyst. Oklo plans to design and operate a 75-megawatt (MW) SMR to supply electricity to the Air Force base. This marks the realization of the SMR commercialization policy led by U.S. President Donald Trump.

There are also positive factors related to Korean nuclear power plants. On June 4, Korea Hydro & Nuclear Power (KHNP) signed the final contract for the Dukovany nuclear power plant in the Czech Republic, which had been delayed. Based on previous cases, orders for KEPCO E&C are expected between the end of this year and next year. For reference, the scale of design orders for two units in the United Arab Emirates (UAE) was about 760 billion won, but this could increase further if design changes to the AP1000 model and inflation are taken into account.

The Kazakhstan nuclear power plant project is also currently in the bidding process. China’s CNNC, Russia’s Rosatom, France’s EDF, and KHNP have been shortlisted.

In the SMR sector, KHNP and Oklo have signed a memorandum of understanding (MOU) for the development of fourth-generation SMR technology. According to the agreement, KHNP will cooperate in the development and verification of the standard design for Oklo's Aurora reactor, and will also collaborate in major equipment manufacturability assessment, the establishment of a supply chain for balance of plant (BOP) equipment for nuclear construction, and constructability evaluation.

There are also expectations for the new government's energy policy. KEPCO E&C is currently developing light water reactor-based SMR models such as SMART and I-SMR. The company aims to obtain standard design approval by 2028 and to introduce commercial SMRs in Korea by 2035. Jung Hyejeong, a researcher at KB Securities, stated, "Considering the campaign pledges of the Lee Jaemyung administration, the plan is to maintain the installation of two new large-scale nuclear power plants and 0.7GW of SMRs as confirmed in the 11th Basic Plan for Long-term Electricity Supply and Demand," adding, "More proactive policies are needed to expand Korean-type SMRs."