[Edaily Reporter KIM YOON-JEONG ] KB Securities lowered its target price for DOOSAN ENERBILITY(034020)to 140,000 won, citing expectations that the timing of new orders for U.S. nuclear power plant equipment will be delayed from this year to next year. However, the firm projected that the U.S. market for new nuclear power plants will gain momentum starting next year, and that demand for gas turbines will support earnings until then. It maintained its “Buy” investment rating.

On the 23rd, Jeong Hye-jeong, an analyst at KB Securities, stated, “The main reason for the target price adjustment is the postponement of nuclear power plant orders in the U.S. market from this year to next year,” adding, “Considering the increasing level of government intervention, we can expect orders for U.S. nuclear power plant equipment starting next year.”
KB Securities estimated DOOSAN ENERBILITY’s second-quarter consolidated revenue at 4.7 trillion won and operating profit at 251.8 billion won. While revenue is expected to increase by 3.8% year-over-year, operating profit is projected to decline by 7.1%. Operating profit is expected to fall 5.7% short of the market consensus.
On the other hand, the firm projected that the Energy Business division would show a notable improvement in performance. As sales of nuclear power plant equipment for the Czech Republic are reflected and revenue from gas turbines ordered late last year is gradually recognized, the Energy Business division’s revenue is forecast to reach 2.4 trillion won—a 7.5% increase year-over-year—while operating profit is expected to rise 36.1% to 125.8 billion won.
KB Securities set a target price of 140,000 won, a 10.3% reduction from the previous target. This figure was calculated using the discounted cash flow (DCF) method and reflects the rise in the weighted average cost of capital (WACC) as well as the postponement of the U.S. nuclear power plant order from this year to next year.
KB Securities cited delays in orders for AP1000 nuclear power plant equipment in the U.S. as the reason behind the recent weakness in the stock price. The stock price, which had been performing well since the beginning of the year, began to decline in May, resulting in a year-to-date (YTD) return of -3.7%.
Researcher Jeong explained, “The U.S. has historically proceeded with new nuclear power plant construction led by private companies, but the main cause of the delay is a bottleneck arising from the allocation of budget overrun risks during the financing process.” He added, “Last June, the U.S. Department of Energy announced a conditional loan policy of up to $17.5 billion for the procurement of nuclear power plant equipment for projects within the U.S., and government-level intervention is expanding, including discussions on South Korean investment projects in the U.S.”
He continued, “We expect demand for gas turbines, driven by the expansion of on-site power generation, to fill the gap,” forecasting that the gas turbine business will underpin the company’s earnings until orders for U.S. nuclear power plant equipment begin in earnest.