This Year Alone, Stock Prices Have Soared 890% — Will They Rise Further? “Not a Temporary Phenomenon” vs. “Already Priced In”

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[The Financial News] Stock prices of domestic construction companies have surged this year, rising nearly tenfold. Against that backdrop, analysts are offering mixed views. Some say the rally is not a temporary phenomenon but a trend rooted in structural competitiveness. Others argue that expectations have already been priced in and have downgraded their outlook.
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According to a report recently published by Eugene Investment & Securities Co., Ltd. under the title "Valuation Burden, But Time to Focus on the Direction," domestic construction companies have surged on expectations of nuclear power plant orders.
As of the close on the 28th of last month, Hyundai Engineering & Construction Co., Ltd. shares stood at 167,100 won, up 142.17% from the start of the year. Daewoo Engineering & Construction Co., Ltd. was especially notable, soaring 893.31% over the same period to 33,410 won.
The report said the sector remains positive on the industry's medium- to long-term growth prospects, regardless of valuation concerns. The reason is that domestic builders' nuclear power competitiveness is likely to strengthen further.
There is growing talk that South Korean nuclear reactor models could enter the United States market. The business could also expand into a "package export" model that covers not only plant construction but also fuel supply and operations.
Hyundai E&C saw expectations rise for entry into the global large-scale nuclear and Small Modular Reactor (SMR) markets, based on its partnership with Westinghouse Electric Company and others. Daewoo Engineering & Construction Co., Ltd. also gained after its role as lead contractor within Team Korea was re-evaluated.
Hyundai E&C is still showing some uncertainty as the selection of a client for a large-scale nuclear project in the United States has been delayed. Even so, the market expects contract wins to follow as soon as business conditions are met. In particular, the company could also take part in Team Korea projects.
Daewoo Engineering & Construction Co., Ltd. is also expected to secure orders once it completes negotiations over construction costs for the Dukovany Nuclear Power Plant in the Czech Republic within the second quarter of this year. It also has additional order pipelines, including Ninh Thuan 2 Nuclear Power Plant in Vietnam and Temelín Nuclear Power Plant in the Czech Republic.
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On the other hand, some brokerages have begun to slow their pace.
Shinhan Securities Co., Ltd. and Mirae Asset Securities both downgraded Daewoo Engineering & Construction Co., Ltd. from "short-term buy" and "buy" to "neutral."
Although the company posted an earnings surprise in the first quarter and still has room for additional overseas orders in nuclear power and Liquefied Natural Gas (LNG) Plant projects, the firms said those expectations have already been reflected in the stock price.
y27k@fnnews.com Seo Yoon-kyung Reporter