Korean nuclear power stocks see recovery on high hopes for overseas orders

Shin Hanul 1 reactor [Photo by Kim Ho-young]

Shares of Korean nuclear power companies are showing signs of a rebound this month following a lackluster performance despite high expectations that the current administration will focus on exports of nuclear power plants.

On Thursday, Doosan Enerbility Co., South Korea’s biggest maker of nuclear reactors, gained 5.9 percent to closed at 18,140 won ($13.68). KEPCO Engineering & Construction Co. gained 6.13 percent to close at 72,700 won. Doosan Enerbility and KEPCO E&C have increased by 11.56 percent and 15.03 percent, respectively, this month. During the same period, KEPCO KPS Co. and KEPID Co. increased 13.43 percent and 7.89 percent respectively.

The Korean nuclear industry has been expected to be one of the largest beneficiaries of the Yoon Suk Yeol administration, along with the defense industry. However, nuclear power stocks have stagnated, only declining by 10 to 40 percent over the past year, whereas defense stocks have shown strong growth, with Hanwha Aerospace Co. shares surging 80 percent.

Starting with the contract for the main construction of Shin Hanul 3-4 reactors in March this year, discussions on new nuclear power plant deals in Poland, the Czech Republic, the U.K., the United Arab Emirates and Saudi Arabia are expected to take place in the second half of this year, said Lee Min-jae, an analyst at NH Investment & Securities Co., forecasting that “momentum related to nuclear power plant exports will boost shares.”

Nuclear power can be an alternative that reduces the risks of high price volatility in the import of oil, gas and coal, said Hwang Sung-hyun, an analyst at Eugene Investment & Securities Co. “As we move into the second half of the year, potential nuclear power plant orders to be won by South Korean companies will come into focus.”

Foreign investors and institutions are actively buying nuclear power stocks amid expectations of new nuclear power plant orders. So far this month, foreign investors and institutions have respectively net purchased 329 billion won and 372 billion won worth of Doosan Enerbility shares, and 67 billion won and 79 billion won worth of KEPCO KPS shares.

As government policy support continues and demand for nuclear power increases in Europe and the Middle East, there are expectations that nuclear power stocks will continue to rise.

“Doosan Enerbility’s new orders will increase from 7.6 trillion won in 2022 to 8.8 trillion won this year and 10.6 trillion won next year” and that could boost shares further, said Moon Kyung-won, an analyst at Meritz Securities Co.