[E-Daily Reporter kyoungeun kim ] HANWHA INVESTMENT & SECURITIES maintained its “Buy” rating and target price of 110,000 won for DL E&C CO., LTD.(375500), estimating that the company’s second-quarter operating profit will exceed market expectations.
Song Yu-rim, an analyst at HANWHA INVESTMENT & SECURITIES, stated on the 6th, “The company’s valuation appeal is expected to increase further due to sustained healthy margins, an increase in new orders, and participation in the small modular reactor (SMR) business.” As of the 3rd, the stock price stood at 64,200 won, leaving 71.3% upside potential relative to the target price.
The firm estimated DL E&C CO., LTD.’s second-quarter revenue at 1.8 trillion won and operating profit at 130.3 billion won. While revenue is down 12.1% year-over-year, operating profit is up 3.2%, and the figure is 9.4% higher than the market consensus operating profit estimate of 119.1 billion won. He stated, “While total revenue is expected to decline by a double-digit percentage due to lower sales in the plant division and at DL Construction, the decline in profits will be limited thanks to a marked improvement in margins in the housing division.” He added, “Combined with non-operating factors such as valuation gains from X Energy and a strengthening exchange rate, net profit is expected to improve significantly.”
New order intake is also strong. He noted, “Following the first quarter, orders in the second quarter also increased year-over-year, driven primarily by the Hannam District 5 project (1.8 trillion won) and the Jeju Clean Energy Combined Cycle Power Plant (500 billion won),” and “In the second half of the year, we are pursuing three domestic power generation projects (1.5 trillion won), one overseas plant project (1 trillion won, FEED), and one overseas bridge project (1 trillion won, ROIST).” Regarding SMRs, he predicted that additional collaboration would materialize within the year based on the standardized design contract with X Energy (approximately 15 billion won), noting that “the potential for reconstruction projects in Iran is a strong investment opportunity.”
Analyst Song added, “The current stock price, based on consensus estimates, stands at a 12-month forward price-to-book (P/B) ratio of 0.46x and a price-to-earnings (P/E) ratio of 6.4x, which is lower than the construction sector average (P/B 0.97x, P/E 10x).”