[Edaily Marketin Reporter LEE GEON-EOM ] NICEHoldings announced on the 24th that it had upgraded the credit rating on DOOSAN ENERBILITY(034020)’s unsecured bonds from “BBB+” to “A-,” and the credit ratings on its commercial paper and electronic short-term bonds (issuance limit of 1 trillion won) from “A3+” to “A2-,” respectively. The rating outlook was assigned as “Stable.” The key factors behind this credit rating upgrade are the increase in orders and the prospect of improved operating performance, driven by an improved business environment for major products such as nuclear power plants and gas turbines.

DOOSAN ENERBILITY possesses excellent business competitiveness in the power generation equipment sector, having participated in numerous domestic and international nuclear power plant construction projects and internalized comprehensive technical capabilities, including the manufacture of main equipment. In particular, the Korean-designed gas turbine, for which technology development was completed, began commercial operation following its installation in July 2023, and the company has recently achieved success in securing a series of overseas orders, capitalizing on the favorable market environment in North America.

Lee Young-kyu, a senior researcher at NICE Rating, stated, “The company has successfully secured numerous new orders for combined-cycle power plant design, procurement, and construction (EPC) projects, as well as gas turbines, including the 3.6 trillion won Shin Hanul nuclear power plant project in 2023 and the 5.6 trillion won Dukovany nuclear power plant project in the Czech Republic in 2025,” adding “As a result, the order backlog on a standalone basis surged from approximately 13 trillion won at the end of 2022 to around 24 trillion won as of the end of March this year. Given the increase in orders for highly profitable power generation equipment such as gas turbines and nuclear power plants, a clear improvement in medium-term profit-generating capacity is anticipated,” he assessed.

However, due to the nature of the power generation equipment business, there is an inherent working capital burden stemming from the time lag between cost incurrence, revenue recognition, and receivables collection.

In fact, as the scale of orders expanded, preemptive capital outlays occurred due to the advance purchase of key equipment for major combined-cycle power plant EPC contracts and the pre-manufacturing of gas turbines to shorten delivery times to North America. Compounded by delays in receivable collection for some projects, the burden of working capital and debt has increased somewhat through the first quarter of this year.

Nara Credit Rating Agency forecasts that, in the medium to long term, the structural working capital burden will ease as the proportion of the power generation equipment manufacturing business increases relative to EPC. While investments in new installations, such as small modular reactors (SMRs) and gas turbines, are scheduled between this year and 2028, they are expected to be executed flexibly in line with the actual volume of orders secured.

Senior Researcher Lee explained, “Although short-term debt burdens have increased due to proactive capital expenditures, from a long-term perspective, the company’s financial structure is improving as the proportion of high-margin equipment production expands.” He added, “Based on excellent financial flexibility and resilience—including the collateral value of its assets and unused credit lines—the company will be able to maintain sound financial stability going forward.”