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First overseas nuclear EPC contract to be secured in 2026

In 2026, we expect Daewoo E&C to secure its first-ever overseas nuclear power EPC contract (the Czech project). In Jun. 2025, the Team Korea consortium, led by Korea Hydro & Nuclear Power (KHNP), signed a contract with CEZ for units 5 and 6 of the Dukovany nuclear power plant. While the EPC contract with Daewoo E&C, initially expected in 2025, was delayed, KEPCO E&C and Doosan Enerbility disclosed in Dec. 2025 that they had signed contracts covering the engineering and procurement scopes, respectively. Provided KHNP’s participation in the Czech project is not canceled, we believe a construction contract with Daewoo E&C will inevitably follow.

Broader overseas nuclear exposure expected via Team Korea

We are also encouraged by the firm’s potential to expand its overseas nuclear presence via Team Korea. We believe that expectations for broader participation across the nuclear value chain via Team Korea are supported by recent developments, including: 1) discussions to revamp the dual-track nuclear export framework involving KEPCO and KHNP; 2) KEPCO’s review of direct investments in US nuclear companies; and 3) KHNP’s acquisition of a stake in TerraPower to facilitate SMR adoption.

Beyond the Czech project, Team Korea is targeting other large-scale overseas nuclear opportunities in Saudi Arabia, Romania, and Turkiye. Consequently, we expect Daewoo E&C’s overseas nuclear order pipeline via Team Korea to expand and diversify further over time.

Raise TP to W6,500; our second-most preferred pick in the sector

We raise our target price for Daewoo E&C by 20% from W5,400 to W6,500 (target P/B raised from 0.5x to 0.6x, reflecting a 20% premium to the target P/B for housing peers) and recommend the stock as our second-most preferred pick. Despite the recent share rally, the Jan. 21 closing price remained below par value (W5,000), suggesting it is premature to raise valuation concerns.

Relative to Hyundai E&C, our sector top pick, Daewoo E&C faces limitations, stemming from: 1) restricted access to the North American and European markets due to a less extensive global partnership network; and 2) the absence of SMR-related upside. Nuclear projects secured through Team Korea entail both advantages and drawbacks: while they offer more stable margins than private-sector partnerships, the company’s scope of involvement is largely confined to construction. Nevertheless, we believe Daewoo E&C’s first tangible achievement in overseas nuclear projects and the potential for further expansion via Team Korea warrant a valuation re-rating. Even after the recent share price surge, the stock trades at a 2026F P/B of 0.44x, which we view as still attractive considering the housing peer average (0.35x) and Hyundai E&C (P/B 1.41x).