Doosan Enerbility is well known to us as Doosan Heavy Industries and is one of the most competitive companies in the field of power generation in Korea. Doosan Enerbility's Q3 earnings results have been announced. Although it was slightly below consensus, the stock price finished largely unchanged. With the need for nuclear power emerging in the era of carbon neutrality, the prospects are bright because it has a unique position as a nuclear main equipment supplier. In fact, Doosan Enerbility also won the order of Shin Hanul 3 and 4 main equipments in Korea. Let's look into Doosan Enerbility's stock price outlook.
Introduction of Doosan Enerbility Business
Doosan Enerbility had a name of Doosan Heavy Industries & Construction not long ago, but recently changed its name to Doosan Enerbility. It is the largest affiliate of Doosan Group and has established itself mainly as a power generation facility business and EPC player of power plant.
The main businesses include steam turbine manufacturing and nuclear power main equipment, and recently, they are also challenging the gas turbine and wind power business. The design and manufacture of coal-fired boilers were also major businesses, but as coal-fired power has become difficult in the recent era of carbon neutrality, they are almost ending their boiler business, seeking a new path as a gas turbine manufacturer, and challenging gas turbine demonstration projects with the support of the Korea government.
Current Status of Doosan Enerbility
Doosan has been structurally challenged by Korea's de-nuclear policy, but it is improving after a major reorganization and sale of its affiliates. Recently, orders and sales have increased due to the new start of nuclear power generation and the withdrawal of major power generation EPC companies. The financial statements show that operating profit has been steadily improving since 2019, reducing debt and increasing capital. The PBR chart is showing signs of a short-term high and falling again, as nuclear power-related stocks have recently risen. Looking at the PBR chart, it doesn't appear to be a low point yet, but we're not sure yet if we're going to fall a little further or if we're going to trend upward again.
Doosan's Future Outlook
1) Gas turbine
The gas turbine developed by Doosan Enerbility is a large, high-efficiency gas turbine. Therefore, it may not be suitable for international markets. However, in Korea, if large coal-fired power plants stop operating, there is no alternative but nuclear and combined power plants. In addition, because district heating is possible, a combined thermal power plant can be built in urban development, and it seems that it can easily settle in the domestic market as it is supported by national projects and the government. However, it is still questionable whether it will be able to establish itself as a global player in the future.
2) Wind Power
In the case of wind power generation, the wind market is currently slowing down a little. However, since the proportion of wind power generation within Doosan Enerbility is not high, the situation of wind power generation and the stock price can move separately.
3) Steam Turbine and Equipment for Nuclear Power Plant
It mainly supplies main equipment for nuclear power plant and steam turbine.
Power generation equipment has a deep moat, making it difficult for other companies to easily advance, and Doosan's share of domestic market is almost monopolized in the nuclear area and steam turbine. Especially for conservative nuclear power businesses, it is a very difficult market for new companies to enter. However, nuclear power generation takes a long time to plan and build a real project, so it will take time to get caught in actual sales.
Doosan Enerbility has won orders to supply Shin Hanul's 3rd and 4th nuclear power plant main equipments and jumped in even construction area. Suppling main equipement is a business with a very good operating profit ratio and is expected to greatly contribute to sales and operating profit in the future, and among the construction consortiums of Shin Han-ul Units 3 and 4, the consortium consisting of Hyundai Engineering & Construction, Doosan Enerbility, and POSCO E&C is the most promising. In addition, Samsung C&T, GS E&C, DL E&C / Daewoo E&C, SK Eco Plant, and Kumho E&C will form a consortium and participate before the bid.
In addition, Doosan is active in Dry Cask (cast market). It recently took the first step by winning the KHNP Cask project.
A company called Holtec is monopolizing the global cask market share. Cask is a container used to store spent nuclear fuel in wet storage in fuel buildings and then transfer it to a dry storage facility. Nuclear power generation is emerging as a carbon-free power generation method in the era of carbon neutrality, but in fact, the biggest problem with nuclear power generation is spent fuel. Domestic wet storage facilities are already saturated, and the future of nuclear power generation is dark unless the treatment of spent fuel is resolved. This is the same worldwide, and dry storage facilities are being introduced worldwide. In the case of Cask, the sales volume is not large, but the operating profit is high, which could be Doosan Enerbility's Cash-Cow in the future.
We looked at the prospects of Doosan Energy, the largest power generator in Korea, as a power generation worker. There may be further declines in the short term, but the outlook is expected to be bright over the next few years.
