[Edaily Reporter Kwon Oh Seok ] NH INVESTMENT & SECURITIES announced on the 10th that it is maintaining its “Buy” rating on KEPCO Engineering & Construction(052690)but lowering its target price from 212,000 won to 188,000 won.

Lee Min-jae, an analyst at NH INVESTMENT & SECURITIES, explained, “The reason for maintaining the investment rating is that, in addition to the solidification of cooperation between South Korea and the U.S. on nuclear power plant construction, we expect continued orders for the APR1400 (a 1.4 GW-class Korean-designed nuclear reactor) for new domestic plants to be included in the 12th Basic Plan for Electricity Supply, as well as projects in Vietnam and the Czech Republic.”
He added, “If business cooperation with Westinghouse materializes, we can also expect revenue growth from the AP1000,” but noted, “We are lowering the target price to reflect the increase in the cost of equity resulting from rising interest rates.”
He emphasized, “According to media reports, the expected power load from the three major mega-projects is approximately 26 GW. Taking into account the closure of aging coal-fired power plants, we estimate that 4 to 6 large-scale nuclear reactors will be needed.” He added, “If up to 6 reactors are included in the 12th Basic Plan for Electricity, in addition to the 2+1 new reactors included in the 11th Basic Plan, it is projected that the largest number of large-scale nuclear reactors in history will be constructed.”
He added, “Considering the electricity demand from semiconductor clusters, AI data centers, and other sources, the introduction of nuclear power in the mid- to long-term is essential.”
In the second quarter of this year, consolidated revenue was 103.3 billion won (down 3% year-over-year), and operating profit was 3.0 billion won (returning to profitability), both falling short of consensus estimates. The analyst explained, “This is due to a decline in construction revenue resulting from the imminent completion of the Saeul Units 3 and 4 nuclear power plants and the EPC (Engineering, Procurement, and Construction) project in Indonesia,” adding, “Since the number of projects being executed is low, even a delay in a single project has a significant impact on earnings.”
He also noted, “Going forward, volatility in related earnings is expected to decrease as additional nuclear power projects proceed in South Korea, Vietnam, and the Czech Republic.”