Shinhan Investment Corp. assessed on October 30 that despite recent stock adjustments, Doosan Enerbility's long-term growth potential in the nuclear power equipment and gas turbine sectors remains intact. However, reflecting valuation pressures and adjustments to earnings estimates, the firm lowered its target price from 135,000 won to 110,000 won, an 18.5% decrease. The investment rating remains 'buy.'
Han Seung-hoon, a researcher at Shinhan Investment Corp., stated, "The collapse of negotiations for the Czech nuclear power plant and the 56 trillion won supply contract for main equipment are separate issues. Based on our capabilities in manufacturing and installing main equipment and local business experience, the likelihood of participating in new construction consortiums is high."
Doosan Enerbility reported a consolidated revenue of 4.4495 trillion won for the third quarter of this year, marking a 14.7% increase compared to the same period last year. Operating profit surged to 261.2 billion won, a 90.6% rise, exceeding market expectations of 245.5 billion won by 6.4%.
The improvement in performance was driven by the recovery of profitability in the Enerbility sector and the pricing strategy of Doosan Bobcat. The Enerbility sector achieved an operating profit of 121.1 billion won, a 179.2% increase year-on-year, thanks to progress in gas power projects in the Middle East and the Czech Dukovany nuclear power plant. New orders in the third quarter also rose to 28.766 trillion won, a 76.2% increase.
Additional order opportunities are materializing in the overseas nuclear power sector. The AP1000, a U.S.-style nuclear power plant, has increased order potential due to financial support for long-lead equipment from the U.S. Department of Energy and the initiation of the procurement process for Poland's first reactor. In the small modular reactor (SMR) sector, follow-up orders from X-energy's initial project are anticipated, while negotiations and reservations for gas turbine shipments are ongoing through 2031.
However, Shinhan Investment Corp. has widened the discount rate for corporate valuation from 30% to 40%, considering the high-interest environment and the time lag between orders and actual performance. The estimated consolidated operating profit for this year and next year has also been lowered by 6.6% and 8.6%, respectively.
Han noted, "While we adjusted some profitability improvement rates and subsidiary performance forecasts in the Enerbility sector, the long-term growth trajectory remains valid due to the concretization of nuclear power equipment orders and the expansion of gas turbine orders."
* This article has been translated by AI.
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