[Edaily Reporter Shin Ha-yeon ] On the 3rd, IBK Investment & Securities projected that BHI Co., LTD.(083650)would post second-quarter earnings exceeding market expectations, driven by balanced growth across all business divisions, including HRSGs (heat recovery steam generators), boilers, and nuclear power plant auxiliary equipment (B.O.P.). While the target price was lowered from 140,000 won to 110,000 won to reflect the decline in KOSDAQ market valuations, the investment rating was maintained at “Buy.”

Kim Tae-hyun, an analyst at IBK Investment & Securities, stated, “Consolidated revenue and operating profit for the second quarter are expected to exceed consensus estimates at 272.6 billion won and 35.2 billion won, respectively,” adding, “We anticipate balanced growth across all business segments, including HRS Co., Ltd. and boilers, and believe there are limited factors causing significant pressure in terms of costs and SG&A expenses.” He continued, “However, net income is expected to be relatively weak as losses from derivative transactions resulting from the rising exchange rate—a trend that continued from the first quarter—are reflected in the results.”

Analyst Kim predicted that the HRSG business would lead earnings growth. He explained, “HRSG revenue is expected to expand to 1706억원, driving company-wide earnings growth,” adding, “The upward trend in exports is expected to continue as revenue is recognized from numerous projects, including the Saudi LNG combined-cycle power plant secured last year.” He added, “New orders are estimated at approximately 4000억 won, including a 1883억 won supply contract signed with TPSC (Toshiba Plant Systems & Services).”

The boiler and nuclear auxiliary equipment businesses are also projected to maintain stable growth. Analyst Kim said, “Revenue in the boiler division is also expected to grow significantly as revenue recognition continues from the 5177억원 coal boiler supply contract signed last year with a Philippine utility company,” adding, “Revenue from this project began to be reflected in the financials at the end of last year, and it is expected to contribute to stable earnings over the next 3 to 4 years.” He continued, “The B.O.P. segment is also expected to improve significantly as deliveries of steel plates for the containment buildings and stainless steel liners for Shin Hanul Units 3 and 4 begin in earnest.”

Although the target price was lowered, the positive outlook on medium- to long-term growth potential was maintained. Analyst Kim explained, “Despite solid earnings, the company’s stock price has fallen by more than 50% from its March high, in line with the broader correction in the KOSDAQ market,” adding, “Reflecting the decline in market valuations, we are lowering the EV/EBITDA multiple and reducing the target price to 110,000 won.”

He added, “However, as global electricity demand continues to rise and the trend toward expanding LNG combined-cycle power generation persists, we maintain our ‘Buy’ rating, believing that the company’s medium- to long-term growth potential and ability to benefit from these trends remain valid as the market leader in HRSG market share.”