[Click e-Stock] "DL E&C Has Ample Upside Potential Driven by SMR"

On July 2, Daishin Securities stated that DL E&C still has significant upside potential, considering not only the potential of SMR (Small Modular Reactor) power but also its financial soundness and profit growth. The firm raised its target price by 40.9% to 62,000 won. The buy investment rating was also maintained.

On the same day, Lee Taehwan, a researcher at Daishin Securities, explained, "In addition to the earnings recovery trend among construction companies, DL E&C's share price has risen more than its peers due to the potential to secure SMR business opportunities through its approximately 2% equity investment in X-Energy, a U.S.-based fourth-generation SMR company."

For the second quarter, the company is expected to post consolidated revenue of 1.9 trillion won (down 10.4% year-on-year), operating profit of 101.1 billion won (up 210.6% year-on-year), and an operating margin of 5.5% (up 3.9 percentage points year-on-year). These figures are slightly below the market consensus.

Researcher Lee commented, "With the completion of high-cost projects in the first quarter, the separate housing cost ratio is expected to decline to the high 80% range from the second quarter onward. Considering that the increase in private sector project orders will also be reflected in the second half, further improvement in the cost ratio is possible, making the trend of lower performance in the first half and higher in the second half clear. Given that this cost ratio excludes one-off gains, the improvement in profitability is encouraging," he added.

He continued, "Although separate housing orders exceeded 900 billion won for the quarter, other business segments showed sluggish performance. While there are no expected changes to the order plan as the planned volume is concentrated in the second half, the plant division will need to step up its efforts to maintain growth."