KB Securities maintained a "buy" rating for Hyundai Engineering & Construction on July 22, forecasting that momentum in the U.S. nuclear power sector will pick up in the second half of this year. The firm lowered its target price from 230,000 won to 170,000 won but still considers Hyundai Engineering & Construction its top pick in the construction sector.
Jang Mun-jun, a researcher at KB Securities, noted, "Despite recent poor stock performance, the period from the second half of 2026 to 2027 will be crucial for nuclear power investments. We continue to present Hyundai Engineering & Construction as our preferred stock, as it is a leading nuclear power company in Korea and is poised to become a global player in the field."
The company is expected to meet market expectations for its second-quarter results, with consolidated sales projected at 6.8951 trillion won, a 10.7% decrease from the same period last year, and operating profit estimated at 205.1 billion won, down 5.5%. Analysts believe that improved profitability in the housing sector and among consolidated subsidiaries will support these results.
Looking ahead, the firm anticipates progress in the U.S. nuclear market, driven by a $17.5 billion supply chain loan program from the U.S. Department of Energy, the IPO of key partner Holtec, the restart of the Palisades nuclear plant, and the commencement of small modular reactor (SMR) projects.
Hyundai Engineering & Construction's extensive experience in nuclear construction is also seen as a competitive advantage. The company has been involved in nuclear construction for over 50 years and has experience building ten large nuclear reactors simultaneously in the early 2010s.
Jang added, "In the context of increasing demand for AI infrastructure and energy security, the value of construction timelines is rising. Particularly in nuclear power, the value of time is significantly greater than in other infrastructure projects, making Hyundai Engineering & Construction's extensive construction experience and track record in international projects particularly valuable."
However, KB Securities adjusted its target price to reflect an increase in the cost of equity due to rising risk-free rates, lowering it from 230,000 won to 170,000 won.
* This article has been translated by AI.
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