[Click eStock] "Hyundai E&C Returns as a Nuclear Power Stock, U.S. SMR Becomes Reality"

On October 22, KB Financial Group stated that Hyundai Engineering & Construction is poised to reestablish itself as a leading nuclear power stock, as its entry into the U.S. small modular reactor (SMR) market becomes increasingly visible. The company maintained its "Buy" investment rating but lowered its target price to 93,000 won.

Kang Minchang, a researcher at KB Financial Group, said, "Hyundai Engineering & Construction saw a remarkable rise in its stock price in the first half of the year as a representative nuclear power stock. However, since mid-July, investment sentiment has been heavily dampened by uncertainty surrounding the construction industry (including safety issues and real estate regulations) and concerns over earnings performance." He added, "Unlike the first half, the company appeared to have diverged from the rally in Korean nuclear power stocks, but a clear buying opportunity has emerged amid these concerns."

Kang explained, "The time for the commencement of nuclear power plant construction has finally arrived, which will further solidify the company's identity as a nuclear power stock. By early 2026 at the latest, construction of the Palisades SMR in the United States is expected to begin in partnership with Holtec, and in 2026, in addition to starting construction of a nuclear power plant in Bulgaria with Westinghouse, we can also anticipate tangible results from the U.S. nuclear market."

Holtec, Hyundai Engineering & Construction's SMR partner, plans to restart the 800MW Palisades nuclear power plant in Michigan in mid-December. This will mark the first-ever restart of a decommissioned nuclear power plant in U.S. history. Holtec aims to use the Palisades restart as a "stepping stone toward SMR." With the launch of SMR construction in the United States, Hyundai Engineering & Construction is expected to secure orders worth around 4 trillion won, while the construction of the Bulgarian nuclear power plant is projected to generate orders worth between 10 trillion and 12 trillion won.

However, the target price has been revised downward. Kang stated, "We have lowered our target by 4.6% compared to the previous figure, reflecting an increase in the market risk premium for the fourth quarter of 2025, changes in profit estimates and a reduction in the applied ROE due to the inclusion of costs related to existing overseas projects."

He added, "As the start of nuclear power plant construction approaches, the value of Hyundai Engineering & Construction's nuclear business, which will drive the company for more than the next ten years, will become increasingly clear. The company will return to being a top nuclear power stock, which is why it remains our top pick."