LS Securities on Wednesday raised its target price for KEPCO Engineering & Construction to 230,000 won from 190,000 won, saying the company’s operating performance is expected to rebound sharply this year after what it called a transitional slump last year. It maintained a “buy” rating.
Analyst Seong Jong-hwa said first-quarter operating profit is forecast at 10.1 billion won and revenue at 120.1 billion won, up 751% and 25%, respectively, from a year earlier. Revenue is expected to match the market consensus, while operating profit is projected to beat it by a wide margin, he said.
For the full year, LS Securities forecast operating profit of 66.3 billion won and revenue of 622.3 billion won, up 87% and 20% from a year earlier. Seong said the estimates reflect a recovery in progress rates for major design projects, pre-design revenue for Dukovany units 5 and 6, and orders for renewable-energy EPC (engineering, procurement and construction) projects.
Seong said this year’s results are expected to normalize on a dramatic rebound from last year’s weakness, but added that the stock’s cycle is difficult to explain based solely on fundamental value tied to near- and midterm earnings trends.
He said the company’s valuation also requires pricing in the long-term direction of nuclear power expansion at home and abroad, but that estimating value based on complex assumptions and probabilities — including schedules, order prospects and deal sizes for major nuclear equipment projects — is itself uncertain.
Citing a favorable nuclear market environment, strong long-term growth potential and the company’s position as a nuclear design firm and a representative nuclear EPC stock, Seong said the shares could be dull in periods without nuclear-related events or issues. Still, he said, it remains a representative long-term nuclear investment tied to the sector’s long-term growth trajectory at home and abroad.
* This article has been translated by AI.
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