Hyundai Engineering & Construction and Daewoo Engineering & Construction, two South Korean stocks recognized as nuclear power plays this year, saw target price downgrades from multiple securities firms in the recent month. The downgrades reflect delayed timelines for anticipated nuclear plant contract awards, with 7 out of 10 firms lowering Hyundai E&C's target and 5 out of 8 reducing Daewoo E&C's outlook. Both companies had attracted significant investor attention earlier this year on expectations of securing overseas nuclear project contracts, particularly in the United States market where South Korean construction firms have established strategic partnerships with local nuclear developers.
Securities Firms Lower Target Prices for Hyundai E&C and Daewoo E&C
According to Yonhap Infomax Consensus Comprehensive 2 data as of the 25th, 7 out of 10 domestic securities firms that issued opinions on Hyundai E&C in the recent month lowered their target prices. Before the downgrades, Hyundai E&C's target price ranged between 180,000 won and 231,000 won, but the adjustments brought the range down to between 170,000 won and 180,000 won.
Daewoo E&C experienced similar treatment, with 5 out of 8 firms that issued opinions in the recent month lowering their targets. As recently as May, securities firms had maintained or even raised target prices following first-quarter earnings announcements. For Hyundai E&C, 10 out of 20 domestic securities firms raised their targets in May, while 9 out of 10 firms upgraded Daewoo E&C's outlook during the same period.
At that time, expectations for nuclear plant contract awards remained strong, with some analysts suggesting results could materialize within the second quarter.
![K-Nuclear Power Plant Illustration]()
Stock Prices Fall Sharply from April Highs
Hyundai E&C's stock price, which reached 188,700 won on a closing basis in April, finished trading at 106,200 won on the 24th. Daewoo E&C similarly declined from 37,150 won on a closing basis in April to its current level of 15,300 won.
![Hyundai E&C Stock Price Trend]()
The securities industry is reflecting weakened expectations stemming from delayed contract award timelines in their valuations.
Analysts Cite Contract Award Delays While Maintaining Long-Term Outlook
Lee Sang-ho, a researcher at Kyobo Securities, stated regarding Hyundai E&C: "Market expectations have lowered due to delayed nuclear plant contract awards and the correction phase. The possibility of a Palisades partial contract during the third quarter still exists, and Fermi's hyperscaler PPA contract is also progressing, in our judgment."
For Daewoo E&C, analysts noted that target price downgrades reflected the lack of concrete results to date. Ryu Tae-hwan, a researcher at Eugene Investment & Securities, explained: "The mid- to long-term growth direction centered on LNG and nuclear power remains valid, but we lowered the applied multiple to reflect delays in the materialization of major project awards. If contract visibility expands in the future, valuation re-rating will be possible."
Kim Ki-ryong, a researcher at Mirae Asset Securities, observed: "The foundation of overseas nuclear power expectations lies in the government's favorable stance and Team Korea's nuclear export expansion movements. It is important to note that many U.S. nuclear power players have established strategic cooperative relationships with Korean construction companies."
FAQ
Why did securities firms lower target prices for Hyundai E&C and Daewoo E&C stocks?
Securities firms lowered target prices due to delayed timelines for anticipated nuclear plant contract awards. While expectations for contract wins remain valid, the timing has been pushed back beyond initial projections, prompting analysts to adjust their valuations to reflect the extended timeline.
How much have Hyundai E&C and Daewoo E&C stock prices declined from their April highs?
Hyundai E&C's stock price fell from 188,700 won on a closing basis in April to 106,200 won on the 24th. Daewoo E&C declined from 37,150 won in April to its current level of 15,300 won, representing significant corrections from the peaks reached earlier this year.
Do analysts still expect nuclear plant contract awards for these companies?
Yes, analysts maintain that contract award expectations remain valid. Kyobo Securities noted the possibility of a Palisades partial contract during the third quarter and ongoing progress on Fermi's hyperscaler PPA contract. Eugene Investment & Securities affirmed that the mid- to long-term growth direction centered on LNG and nuclear power remains intact despite near-term delays.
