HD Hyundai Heavy Industries Forecast to Generate KRW 10 Trillion in Engine Revenue by 2030; Daewoo Engineering & Construction Named Team Korea’s Leading Nuclear-Export Construction Partner [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms as of the morning of September 11.
HD Hyundai Heavy Industries’ decision to invest more than KRW 1 trillion in a new power-generation engine production base and an SMR primary-equipment factory has been assessed as exceeding market expectations in both scale and scope.
Daewoo Engineering & Construction’s target price was raised on analysis that it would benefit as Team Korea’s leading construction partner as nuclear exports become more concrete following the announcement of U.S. investment in eight large reactors. LS was assessed as likely to continue improving its performance in the second half of the year and to have substantial share-price upside even under conservative assumptions.
◆ HD Hyundai Heavy Industries (329180)— Korea Investment & Securities / Researcher Kang Kyung-tae
— Target price: KRW 1 million (maintained) | Previous closing price: KRW 453,500
— Investment rating: Buy (maintained)
Korea Investment & Securities maintained its Buy rating and KRW 1 million target price for HD Hyundai Heavy Industries, saying the company’s investment of KRW 107.22 billion to build a new power-generation engine production base and a dedicated SMR primary-equipment factory, announced the previous day, exceeded market expectations. The plan calls for a new 3-gigawatt (GW) HiMSEN engine production base in Onsan-eup, Ulsan, and the expansion of the HD Hyundai Engine plant in Yeongam, South Jeolla Province, into a dedicated 1-GW power-generation engine facility.
Researcher Kang Kyung-tae stated, "The decision to invest in production facilities for 4 GW of high-output power-generation engines and two fourth-generation small modular reactors (SMRs) exceeded market expectations in both scale and scope."
Wärtsilä, Everllence and HD Hyundai Heavy Industries are the world’s three companies with original technology licenses for medium-speed power-generation engines. Kang said, "Based on the scale of the facilities after completion, the company will surpass Wärtsilä and Everllence. It also plans additional expansion using the remaining 15,000 pyeong of the land it acquired, so its market share could rise further." He added, "I did not expect investment in SMR primary equipment to begin this quickly." Once the expansion is completed, HD Hyundai Heavy Industries will have the largest production capacity among the world’s three major engine manufacturers.
Korea Investment & Securities raised its 2028 net profit estimate by 10.2%, reflecting only the effects of the new and expanded engine facilities. Revenue from SMR primary equipment expected to begin in 2028 has not yet been included. Kang said, "Assuming all demand has been secured, annual revenue from the engine machinery division will reach KRW 10 trillion in 2030, when the 4 GW capacity is operating at 100%." He added, "We maintain HD Hyundai Heavy Industries as our top pick in the shipbuilding sector, and its corporate value could be upgraded further if the valuation date is shifted to a year when utilization begins to rise." ※Small modular reactor (SMR)SMRs are next-generation reactors made by reducing the size of conventional large nuclear reactors, mass-producing their components in factories and assembling them on site. Because they require shorter construction periods and less land, proposals to build them next to data centers are being actively discussed. The factory HD Hyundai Heavy Industries plans to build will be dedicated to producing key SMR equipment, including reactor pressure vessels and steam generators.※HiMSEN engineThe HiMSEN engine is a medium-sized engine independently developed by HD Hyundai Heavy Industries, which owns its original technology. It was originally used mainly for propulsion in medium-sized vessels or power generation on large ships. More recently, it has attracted attention as a power-generation engine capable of supplying electricity to artificial-intelligence (AI) data centers, which consume large amounts of power.
◆ Daewoo Engineering & Construction (047040)— NH Investment & Securities / Researcher Lee Eun-sang
— Target price: KRW 30,000 (raised 15.4%; previous target: KRW 26,000) | Previous closing price: KRW 19,750
— Investment rating: Buy (maintained)
NH Investment & Securities raised Daewoo Engineering & Construction’s target price to KRW 30,000, saying the company’s benefits would come into focus as Team Korea’s nuclear exports become more concrete following the announcement of U.S. investment in eight large reactors. The increase reflected a higher target multiple in response to rising nuclear-related stocks and higher earnings estimates ahead of plant orders.
Researcher Lee Eun-sang said, "The announcement of U.S. investment in eight large reactors will bring renewed attention to Daewoo Engineering & Construction’s export competitiveness, based on its experience as a lead nuclear-project contractor." He added, "With the number of Korean construction companies possessing lead-contractor experience in nuclear projects narrowed to three, Daewoo Engineering & Construction is highly likely to participate as Team Korea’s construction partner, considering the business priorities of its competitors." 
The company’s liquefied natural gas (LNG) business was also assessed positively. Since announcing its second-quarter results, Daewoo Engineering & Construction has been selected as the preferred bidder for the Papua New Guinea LNG project and received a letter of intent to award the Mozambique LNG project, putting it close to securing major orders.
Lee said, "Daewoo Engineering & Construction is the only Korean company with a track record as a prime contractor in LNG liquefaction and is one of seven such companies globally." He forecast, "Its LNG competitiveness will regain attention as LNG final investment decision (FID) orders accelerate after the war." The assessment is that the company holds a difficult-to-replace position among Korean construction firms not only in nuclear power but also in LNG plants.※Team KoreaTeam Korea is a consortium in which Korean nuclear companies, including Korea Hydro & Nuclear Power (KHNP), Doosan Enerbility and Daewoo Engineering & Construction, join forces to win overseas nuclear projects. Daewoo Engineering & Construction is participating as the construction lead contractor—the representative construction company overseeing the work—in the Czech nuclear power project.※Final investment decision (FID)FID is the process by which the owner of a large-scale project, such as a gas field or LNG plant costing trillions of won, completes its feasibility review and makes a final decision to proceed with the investment. Engineering, procurement and construction orders can begin only after this decision is made. Therefore, an increase in FIDs means more opportunities for construction companies to win orders.
◆ LS Group (006260)— SK Securities / Researcher Choi Kwan-soon
— Target price: KRW 540,000 (lowered 14.3%; previous target: KRW 630,000) | Previous closing price: KRW 321,500
— Investment rating: Buy (maintained)
SK Securities maintained its Buy rating on LS Group, saying earnings improvement driven by favorable conditions at LS Cable & System, LS I&D and LS ELECTRIC would continue in the second half of the year. It lowered the target price to KRW 540,000 to reflect the decline in LS ELECTRIC’s share price, but estimated the upside from the current price at 68%.
Researcher Choi Kwan-soon forecast, "Earnings growth across LS Group’s subsidiaries will continue in the second half as demand for power infrastructure surges." In particular, LS Cable & System’s order backlog stood at KRW 9.5535 trillion in the second quarter, a record high, while exports to Dutch grid operator TenneT are scheduled to begin in earnest from the fourth quarter.
The analyst judged that the stock was undervalued. LS Group is trading at roughly a 55% discount to its net asset value (NAV), calculated by adding the value of all its stakes in subsidiaries. Choi said, "Even under a conservative corporate valuation, the high discount could narrow through the cancellation of treasury shares." He added, "Considering favorable industry conditions and the upward trend in copper prices, the stock’s upside potential is high."※Bus DuctA bus duct is a power-distribution system that transmits large amounts of electricity through copper or aluminum bars housed inside a metal enclosure instead of using cables. It can safely carry much more power than conventional wiring and is widely used in data centers and large factories.

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