iM Securities Expects HD Hyundai Heavy Industries to See Over 4 Trillion Won Revenue Increase from Engine Expansion

iM Securities stated that HD Hyundai Heavy Industries is expected to see growth in performance due to the expansion of medium engine production capacity, maintaining a 'buy' rating and a target price of 860,000 won. This represents a potential upside of 89.6% compared to the closing price of 453,500 won on September 10.

Researcher Byun Yong-jin noted, "The details of the long-awaited engine expansion have finally been revealed," explaining that HD Hyundai Heavy Industries announced a total investment plan of 1.0722 trillion won for medium engines and small modular reactors (SMR).

HD Hyundai Heavy Industries will invest 833.6 billion won to expand its medium engine production capacity. Currently, the annual production capacity of 3 GW is expected to increase to 7.2 GW after the expansion is completed. The first engine delivery is anticipated in the second half of 2028, with the new plant's operating rate projected to rise from 30% in 2028 to 100% by 2030.

Byun estimated that the revenue would be approximately 1 trillion won per GW annually, with an operating profit margin exceeding 20%. He analyzed that if the expansion is completed as planned and work is secured, a total revenue increase of over 4 trillion won is expected.

For the SMR project, 238.6 billion won will be invested. This investment aims to respond to the entry into the main equipment manufacturing business for SMRs and the increase in order volume, with plans to establish production capacity to manufacture two sodium SMR main equipment units annually after the expansion.

Despite the recent weakness in stock prices, Byun assessed that the fundamentals of HD Hyundai Heavy Industries remain solid. He stated, "While the third-quarter performance may take a slight pause, revenue and operating profit based on the order backlog are expected to steadily rise until 2028," adding that the current stock price, which has actually declined compared to last year, is significantly undervalued.

* This article has been translated by AI.