MERITZ Securities assessed on the 2nd that there is no need to worry about Doosan Enerbility's poor performance in the first quarter of this year. The increase in the cost of existing businesses has been reflected, and the performance does not account for growth businesses that will be fully implemented after the second quarter. The target stock price was raised from the previous 33,000 won to 37,000 won, and the investment opinion was maintained at "buy."

Doosan Enerbility employees are installing rotor blades into the casing for the final assembly of the gas turbine prototype./Courtesy of Doosan Enerbility

Doosan Enerbility's consolidated operating profit for the first quarter of this year was 142.5 billion won, a 60.2% decrease compared to the same period last year. This figure is significantly below the market consensus estimate of 254.1 billion won. However, MERITZ Securities noted that this performance dip could be temporary and forecasts that annual profits will improve in the future.

Moon Kyung-won, a researcher at MERITZ Securities, said, "This performance reflects the increased costs from low-profit projects received around 2021, such as coal-fired EPC contracts," adding, "However, the revenue recognition from growth projects, including Shinhanul Unit 3 and 4, has not yet been fully realized."

He added, "Most of the increased costs are expected to return as profits within this year through negotiations with clients and insurers," and, "The coal EPC projects are expected to be mostly completed in the first quarter, and the share of growth projects is likely to expand to 78% by the fourth quarter."

Interest in gas turbines being developed by Doosan Enerbility is also growing. In particular, demand is increasing, especially around data centers in the U.S., but the supply shortage of gas turbines is worsening. Doosan Enerbility is in discussions to supply 2.5 GW of gas turbines in the Midwest U.S. by 2028.

Researcher Moon said, "The possibility of gas turbine orders in the second quarter will definitely be a trigger that must be noted," and added, "We should also pay attention to the potentially larger Czech nuclear power project and the order for small modular reactors (SMR) within the year."