Korean nuclear power stocks, which had been correcting, are showing signs of a rebound on hopes tied to the United States' policy of expanding new nuclear plants.
According to the Korea Exchange, KEPCO Engineering & Construction closed the previous session at 108,600 won, up 20.27%, marking its second-biggest daily gain of the year, data showed on the 26th. Hyundai Engineering & Construction (14.39%), Doosan Enerbility (9.86%) and KEPCO KPS (4.64%) also all finished higher. Foreign investors sold a net 230.5 billion won worth of the four stocks, but institutions and individuals absorbed 121.9 billion won and 92.8 billion won respectively, driving the surge.
In the first half of this year, nuclear stocks struggled to gain traction. KEPCO E&C fell 59% from its April peak to its late-July trough, while Hyundai E&C and Doosan Enerbility dropped 56.7% and 55.9% respectively. But as expectations grew for orders from U.S. nuclear projects, Hyundai E&C had rebounded 47.9% from its trough as of this session, with KEPCO E&C up 35.3% and Doosan Enerbility up 32.9%.
Behind the signs of a rebound lies a view that energy infrastructure projects, including nuclear plant construction in the United States, are increasingly likely to move into full swing. In June this year, the U.S. Department of Energy (DOE) unveiled a $17.5 billion nuclear supply-chain loan program, allowing long-lead equipment to be ordered ahead of a final investment decision (FID). Analysts say the selection of power operators and orders for long-lead equipment could become visible as early as the second half of this year. Chang Moon-jun, a researcher at KB Securities, said the U.S. strategy to expand nuclear power, which had been somewhat declaratory, would take on concrete, project-level shape starting in the second half.
As a result, brokerages have also raised their price expectations. According to FnGuide, the consensus target price for KEPCO E&C is 177,500 won, 63.4% above this session's closing price. The targets are 129,000 won for Doosan Enerbility, 172,368 won for Hyundai E&C and 64,809 won for KEPCO KPS. Third-quarter operating profit consensus estimates also stand at 15.4 billion won for KEPCO E&C, 248.4 billion won for Doosan Enerbility and 214.4 billion won for Hyundai E&C, up 25.8%, 81.2% and 107.1% respectively from the same period last year.
