SEOUL, KOREA - KB Investment & Securities said on August 29 that Doosan Heavy Industries could make up for the poor performance in the first half with the winning of the project to build the Shin-Gori nuclear reactors Nos. 5 and 6. It, however, maintained the investment opinion at "buy" and the target price of 40,000 won. Doosan Heavy Industries said on the 28th that it signed an agreement to supply main equipment for the two reactors in Shin-Gori Nuclear Power Plant.

 

KB Investment & Securities analyst Kim Hyun-tae said, "Doosan Heavy has waited for the project for the two reactors for more than two years since 2012. Given the company's project success rate was about 50 percent for the past two years and its first-half order booking volume fell short of 1.4 trillion won, this is a godsend for the company."

 

Even though the deal amount is included, the company's sales revenue for the year is far from reaching the original target figure. Still, the profitability of nuclear reactor projects is much higher than any other projects such as EPC (engineering, purchasing, and construction) or desalination projects.

 

The analyst added, "As the Shin-Gori project has been confirmed, the possibility for Doosan Heavy to win more than 7 trillion won in order booking volume has become more visible. By taking into account the past two years' annual order booking volume stayed at the level of the mid-5 trillion won, this is a big increase in three years." 

 

He further said, "It is hard to expect the stock would rise rapidly in the short run because of the uncertainty surrounding the issuing of the redeemable convertible preference shares. But its price-to-book ratio of 0.6 is its best attraction right now."