IBK Investment Securities on the 3rd lowered its target price for BHI (KOSDAQ: 083650) by 21.4%, from ₩140,000 to ₩110,000, while reaffirming its buy recommendation.
The brokerage forecasts second-quarter consolidated revenue of ₩272.6bn, up 61.0% year on year, and operating profit of ₩35.2bn, up 72.5% — both ahead of the market consensus of ₩247.8bn in revenue and ₩29.7bn in operating profit.
By division, heat recovery steam generator (HRSG) sales are expected to lead growth, rising 65.1% to ₩170.6bn, driven by continued revenue recognition from multiple projects including a liquefied natural gas (LNG) combined-cycle power plant in Saudi Arabia.
The boiler division is forecast to generate revenue of ₩50.5bn, a rise of 85.6%, reflecting the ongoing recognition of a ₩517.7bn coal boiler supply contract signed with a Philippine utility company in April last year.
The balance-of-plant (B.O.P) division, which supplies nuclear auxiliary equipment, is projected to surge 1,019.6% to ₩8.7bn as deliveries of containment building steel liners for the Shin Hanul units 3 and 4 nuclear reactors begin in earnest.
Net profit is expected to disappoint relative to the operating line, however, as losses on derivative instruments arising from won weakness weigh on the bottom line.
The target price cut reflects a broader compression in valuations across the KOSDAQ — South Korea's technology-focused secondary exchange — with the EV/EBITDA multiple applied to BHI reduced from 37.6 times to 24.8 times. At the current share price of ₩55,200 (as of 2nd July), the implied upside stands at 99.3%.
New orders in the second quarter are estimated at approximately ₩400bn, including a ₩188.3bn contract signed with Toshiba Plant Systems & Services Corporation (TPSC).