Doosan Enerbility's policy momentum to continue until the U.S. midterm elections... valuation appeal rises - NH Investment & Securities

[Financial News] NH Investment & Securities said it expects Doosan Enerbility to benefit from policy momentum at home and abroad until just before the United States midterm elections. It also said the company still offers attractive valuation compared with global peers. The brokerage kept its target price at 133,000 won and its investment rating at "Buy."
On the 26th, Lee Min-jae, a researcher at NH Investment & Securities, said, "The United States is pushing ahead with 10 large nuclear reactors at the federal level, while state governments, public institutions and private companies are also drawing up plans to introduce small modular reactors (SMRs)." He added, "Korea has also begun discussions on additional nuclear power deployment, driven by long-term electricity demand from the three major mega projects. Europe, the Middle East and Southeast Asia are also still at an early stage, but they are actively pursuing nuclear plant construction."
Gas turbines are also expected to see rising demand in Korea, driven by fuel-switching projects and mega-projects, while demand from North American big tech companies continues. The company is also expected to decide in the second half of the year whether it can secure additional customers, including North American utilities. With delivery schedules similar to those of global gas turbine makers, its competitiveness in the market is also on a comparable level.
Lee said, "The average EV/EBITDA multiple for the gas turbine businesses of global competitors stands at 18 times based on 2030 estimates, which is higher than Doosan Enerbility's. Depending on the share of North America, valuation can differ by more than twofold." He added, "What global competitors have in common is that they have secured sufficient order backlogs and have proven profitability."
He explained, "More than half of the large nuclear and SMR pipeline that Doosan Enerbility can win orders for through 2030 is in North America." He added, "Gas turbines are also expected to have a high North American share, and profitability is likely to be strong, making the expansion of service revenue a positive factor."
Lee said momentum is likely to strengthen both at home and abroad before the United States midterm elections, including high-level talks under the Korea-U.S. nuclear agreement, the announcement of the first U.S. investment, the draft of the 12th Basic Plan for Electricity Supply and Demand, and a nuclear agreement between the United States and Saudi Arabia. However, he noted that volatility is also likely to increase depending on the outcome of the U.S. midterm elections.

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