LS Securities on May 19 expressed a positive outlook for Daewoo Engineering, citing its competitiveness in nuclear power and LNG, and maintained a target price of 45,000 won with an investment recommendation of 'buy.'
Kim Se-ryun, a researcher at LS Securities, stated, "We are estimating the target price based on a sum-of-the-parts (SOTP) valuation, assuming long-term revenue generation from Daewoo Engineering's Team Korea order pipeline, divided into nuclear power and plant and construction sectors."
He further analyzed that, assuming a gradual revenue realization from the Team Korea nuclear pipeline, Daewoo Engineering's peak revenue from nuclear power is projected for 2033.
According to LS Securities, Daewoo Engineering reported an operating profit of 255.6 billion won in the first quarter, marking a 68.9% increase compared to the same period last year, significantly exceeding the consensus estimate of 116.5 billion won by 119.4%.
Kim noted, "The significant turnaround in profits this quarter is primarily due to reflecting a big bath across all business units, including delays and write-offs from unsold properties at the end of last year."
He added, "While one-time gains from settlement profits and scheduled cost adjustments also played a role, the rapid turnaround in margins for the housing and plant sectors is encouraging, indicating a recovery in profit strength. We expect strong performance to continue as we monitor margin recovery throughout the year."
Kim also highlighted the potential for Team Korea's orders, stating, "With the expected construction contract for Daewoo Engineering's Dukovany nuclear power plant in the Czech Republic, the possibility of securing orders for the second phase of the Ninh Thuan nuclear power plant in Vietnam presents significant momentum for Daewoo Engineering."
Additionally, he mentioned, "We are aiming for further orders in global LNG projects in Papua New Guinea, which is significant for enhancing expectations for entering the North American market, including Alaska LNG."
* This article has been translated by AI.
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