Doosan Enerbility: A Key Beneficiary of Potential Nuclear Power Projects Win in the Czech Republic

• The Czech Republic government is in the final stages of selecting companies to build four nuclear power plants which could cost nearly US$30 billion.

• A Korean consortium including KHNP, Doosan Enerbility, KEPCO E&C, and Daewoo E&C is competing mainly against EDF, a French government owned electric utility company.

• If the KHNP consortium is able to win this new order, Doosan Enerbility will be a key beneficiary as it will supply the nuclear reactors and steam generators.

Photo by Nicolas HIPPERT on Unsplash

The Czech Republic government is in the final stages of selecting a consortium of companies to build four nuclear power plants in Dukovany and Temelin by 2036 worth nearly US$30 billion.

A Korean consortium mainly includes Korea Hydro & Nuclear Power (KHNP), Doosan Enerbility (034020 KS), Kepco Engineering & Construction (052690 KS), and Daewoo Engineering & Construction (047040 KS). The Korean consortium is competing mainly against EDF, a French government owned electric utility company. Initially, the United States, France, and South Korea competed for this contract but now only France and South Korea are remaining. The final winner is expected to be announced this July.

The KHNP consortium has been emphasizing on lower construction costs and its ability to complete the construction on time in efforts to win this mammoth deal. If the KHNP consortium is able to win this new order, Doosan Enerbility will supply the reactors and steam generators. Furthermore, steam turbines for the new nuclear power plants will be made by Doosan Skoda Power, a Czech turbine manufacturer acquired by the Doosan Group in 2009.

Although we believe the Korea consortium has an excellent chance of winning this huge nuclear power plants construction in the Czech Republic, the final outcome remains uncertain. Certainly, the rally in its share price in the past several months has reflected its potential win of the nuclear power plant construction in the Czech Republic.

So, there is bound to be some near term share price weakness if the Korea consortium fails to win this contract. Nonetheless, there remains a solid tailwind of increasing emphasis on nuclear power in Korea and other major reasons including Eastern Europe. Therefore, we remain Positive on shares of Doosan Enerbility.