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2Q26 review: The pieces are falling into place

2Q26 review: Earnings profile continues to improve

For 2Q26, Doosan Enerbility posted operating profit of W314.3bn (+16% YoY; OP margin of 6.7%), exceeding the consensus (W262.9bn). The Enerbility unit recorded revenue of W2.23tr (-1.5% YoY, +17.8% QoQ) and operating profit of W97.4bn (+5.4% YoY, +71% QoQ), showing meaningful QoQ improvement. Large gas-fired power projects won in 2025-26 began making meaningful revenue contributions, while higher-than-expected progress-based revenue recognition in the nuclear equipment business provided additional support. The unit’s OP margin also improved QoQ to 4.4% (vs. 3% in 1Q26), as the high-margin equipment business accounted for a larger share of revenue.

Compelling growth road map taking shape in the US and Korea

Visibility is improving for US nuclear equipment orders. In June, a task force was formed to oversee Korean investment in the US, and we expect details of the first investment project to take shape in August/September. We believe the initial investment will focus on Doosan Enerbility’s core business areas: nuclear power and gas-fired generation. Assuming investment in nuclear power reaches US$40bn, comparable in scale to the amount announced under Japan’s US investment program, we estimate that the company could secure around W3.7tr worth of equipment orders. Additionally, Westinghouse is expected to place advance orders for long-lead items for up to five projects, each comprising two reactors, to be developed with utility partners under a Department of Energy-backed financing program. Doosan Enerbility is also reportedly close to signing major equipment manufacturing contracts with NuScale and X-energy.

Domestically, we expect major infrastructure projects to drive additional orders for both nuclear equipment and gas turbines. The planned development of a high-tech semiconductor hub in southwestern Korea is likely to increase projected electricity demand under the 12th basic plan for long-term electricity supply/demand. As semiconductor manufacturing requires substantial baseload power, we estimate that at least 18.4GW of new generation capacity will be required. While 29.2GW of renewable capacity is planned, we estimate that it will provide only around 4GW of firm capacity, implying a need for roughly 14GW of additional baseload generation. Accordingly, the government is reviewing plans to build two to four additional large-scale nuclear reactors. We also expect further discussions on additional gas-fired generation projects to help fill the remaining firm capacity shortfall.

Maintain Buy; cut TP by 33% to W100,000

We maintain our Buy rating on Doosan Enerbility but cut our target price to W100,000 (from W150,000). We raised our 2034F EBITDA, reflecting expected US investments and the mega-project in southwestern Korea. However, considering the recent de-rating across the nuclear and heavy industry sectors, we lowered our target multiple from 31.4x to 20.9x. While the unwinding of expectations surrounding data center power demand has eased valuation concerns, we believe long-term earnings upside has actually expanded. Given the expected near-term order momentum for gas turbines and nuclear equipment, we view the recent pullback as a buying opportunity.