Mirae Asset Securities reaffirmed a "Buy" rating and a target price of KRW 175,000 on Hyundai Engineering & Construction (KOSPI: 000720) on 15th October 2026, identifying the company's nuclear power business as the pivotal catalyst for a share-price recovery. Based on the closing price of KRW 98,800 on 14th October, the implied upside stands at 77.1%.
Third-quarter results broadly on track
Kim Ki-ryong, an analyst at Mirae Asset Securities, estimates Hyundai E&C's consolidated third-quarter results (July–September 2026) at revenue of KRW 6.605 trillion, down 15.6% year on year, and operating profit of KRW 206.2 billion, up 99.1% year on year. The operating profit figure is broadly in line with the market consensus of KRW 212.7 billion (based on a one-month average).
The steep decline in revenue is attributed primarily to a contraction in the residential, commercial construction, and plant divisions at the parent-company level. Operating profit, however, nearly doubled, reflecting a combination of factors: the winding down of cost provisions related to S-Oil's Shaheen project in South Korea; an improved residential sales mix driven by urban redevelopment projects; and a favourable base effect stemming from a one-off bond-call charge of KRW 170 billion at subsidiary Hyundai Engineering, which had depressed third-quarter 2025 earnings.
The picture is less flattering below the operating line. Pre-tax profit and net profit attributable to controlling shareholders are estimated to fall approximately 40% short of current consensus, owing to foreign-exchange valuation losses triggered by a sharp appreciation of the Korean won against the US dollar. Currency volatility continues to cloud near-term earnings visibility.
Order backlog building steadily
On the orders front, the momentum is encouraging. Cumulative new orders for the first three quarters of 2026 reached approximately KRW 29 trillion on a consolidated basis — equivalent to 87% of the full-year guidance of KRW 33.4 trillion — even without any overseas nuclear contract wins. With the Papua New Guinea LNG project (KRW 2.1 trillion) and several residential schemes in the pipeline, Mirae Asset expects the annual target to be met comfortably.
The data-centre business is also gaining traction. Following contract wins in Ansan, Gyeonggi Province (KRW 700 billion) and an additional project in Gumi, North Gyeongsang Province, revenues from this segment are expected to scale meaningfully. In 2027, the company plans to pursue roughly KRW 1.9 trillion worth of new data-centre projects totalling 260 megawatts, including a 100MW-plus AI data-centre at Saemangeum for an affiliated group company. Participation in data-centre projects across Japan and the broader Asia-Pacific region is expected to accelerate from 2027 onwards.
Nuclear power: the crux of the investment case
The most consequential section of the report concerns nuclear energy. Mirae Asset notes that three nuclear contracts the market had anticipated this year — the Palisades small modular reactor (SMR) in the United States, four large reactors at the Fermi site in the US, and a partial contract for units 7 and 8 at the Kozloduy plant in Bulgaria — have all been delayed, weighing heavily on the share price.
The numbers underscore the market's sensitivity to these setbacks. Hyundai E&C's shares have delivered an absolute return of -44.1% over the past twelve months. The gap between the 52-week high of KRW 188,700 and the current price of KRW 98,800 is roughly 90%.
Despite the delays, Kim Ki-ryong maintains that a recovery scenario remains plausible. "Given that clients continue to demonstrate a firm intent to proceed, the possibility of partial awards before year-end and a subsequent share-price rebound remains credible," he writes. Additional catalysts in North America include growing visibility on US investment commitments, the company's SMR collaboration with TerraPower, and the progressive formalisation of partnerships with multiple American utilities.
Financial forecasts
Mirae Asset projects full-year 2026 revenue of KRW 27.053 trillion and operating profit of KRW 813 billion, implying an operating margin of 3.0%. For 2027, operating profit is forecast to rise to KRW 1.085 trillion, with the margin widening to 3.8%. While these figures represent a substantial recovery from the operating loss of KRW 1.263 trillion recorded in 2024, they remain well below Hyundai E&C's long-run operating margin of 4–5%, suggesting the rehabilitation of profitability is still a work in progress.
Key risks to monitor
Investors should weigh three principal risks. First, currency exposure: swings in the won-dollar exchange rate are producing significant quarter-to-quarter volatility in net profit, reducing earnings predictability. Second, nuclear contract timing: any further delays to the US and Bulgarian nuclear deals would undermine the primary re-rating catalyst. Third, residential and construction volume: ongoing uncertainty in South Korea's presales market is sustaining a downward trend in parent-company revenues, which may constrain the pace of overall top-line recovery.
*This analysis reflects the views of a single brokerage. Target prices and earnings estimates are based on that institution's assumptions and may differ materially from actual outcomes.*