[E-Daily Reporter PARK MIN ] On the 19th, Shinhan Investment Securities maintained its “Buy” rating on BHI Co., LTD.(083650)and raised its target price by 10% from 100,000 won to 110,000 won, forecasting accelerated revenue growth driven by the conversion of its robust order backlog into sales and an expansion in the proportion of high-margin projects. As of the closing price on the 18th, the stock price stood at 58,900 won.

Han Seung-hoon, an analyst at Shinhan Investment Securities, stated in a report published that day, “HRSG (Heat Recovery Steam Generator) orders are primarily coming from Asia and the Middle East, and revenue from nuclear power plant BOP (Balance of Plant) is also centered on large-scale domestic nuclear power plants,” adding, “If the order pipeline expands to Europe and North America in the future, this is expected to serve as new momentum for the stock price.”

BHI Co., LTD.(083650)’s previously announced second-quarter revenue was 296.3 billion won, a 75.0% increase year-over-year. Operating profit surged 123.1% to 45.5 billion won. Both revenue and operating profit exceeded the market consensus of 247.8 billion won and 29.7 billion won by 19.5% and 53.1%, respectively. The operating profit margin stood at 15.4%, an improvement of 3.4 percentage points compared to the same period last year.

By business segment, HRSG sales drove the earnings growth. Second-quarter HRSG sales totaled 186.7 billion won, an 80.7% increase year-over-year. As shipments to the Middle East continued to be recognized, the company recorded significant revenue growth for the second consecutive quarter.

Revenue in the boiler business also surged by 125.9% to 61.5 billion won, as sales from the 517.7 billion won circulating fluidized bed boiler order secured in the Philippines last year began to be fully reflected. The nuclear power BOP segment recorded 16.8 billion won in revenue—a 2,059.3% increase year-over-year—due to the recognition of revenue for Shin Hanul Units 3 and 4.

Shinhan Investment Securities forecasted that BHI Co., LTD.’s improving performance trend would continue into the second half of the year. It projected BHI Co., LTD.’s third-quarter revenue at 299.2 billion won and operating profit at 37.5 billion won. For the fourth quarter, it estimated revenue of 307.9 billion won and operating profit of 39.2 billion won.

Accordingly, it raised its full-year operating profit estimate for BHI Co., LTD.(083650)from 123.9 billion won to 157.5 billion won, a 27.1% increase. For next year, it also raised its estimate from 153.5 billion won to 189.5 billion won, a 23.5% increase.

Shinhan Investment Securities analyzed that revenue growth will accelerate as the company’s robust order backlog is converted into sales, and that the expansion of high-margin projects, cost improvements, and operating leverage effects will become evident.

This growth trend is also evident in recent order wins. BHI Co., LTD.(083650)signed a 72 billion won contract with Korea South-East Power Co. in July for LNG combined-cycle power generation equipment. In May of this year, the company signed an 188.3 billion won contract with Toshiba-TPSC for LNG combined-cycle power generation equipment, and in April, it signed a 517.7 billion won contract with San Miguel Global Power Holdings Corp. in the Philippines to supply power generation equipment.

Orders related to nuclear power plants are also continuing to come in. Following the signing of a contract with Korea Hydro & Nuclear Power last June for feedwater heaters and degassers for Shin Hanul Units 3 and 4, the company signed separate contracts in February of this year for steel plates and stainless steel liners for the reactor buildings of Shin Hanul Units 3 and 4. The contract values are 62.3 billion won and 43.9 billion won, respectively.