Construction, Power, Nuclear Power, SOFC: Growth Potential Noted

Expectations for large-scale U.S. investment projects have led to strength in construction stocks. In particular, news of the potential confirmation of eight nuclear power plant construction projects in the U.S. has garnered significant market attention.

Driven by these expectations, shares of major construction companies including Daewoo E&C, DL E&C, and Hyundai E&C all rose.

As anticipation for U.S. nuclear power investment grew, nuclear power-related stocks showed strong upward momentum. Market participants' interest concentrated on these stocks, raising expectations for returns.

SNT Energy, KEPCO E&C, BHI, and Doosan Enerbility stood out in the market with double-digit surges.

The power infrastructure sector also performed well. Cable and power equipment related stocks generally showed an upward trend, attracting market attention.

Kwangmyung Electric saw a significant rise of over 10%, while other power equipment related stocks like Hyosung Heavy Industries and HD Hyundai Electric also closed higher.

Solid Oxide Fuel Cell (SOFC) related stocks also recorded strength. Doosan FuelCell, in particular, attracted market attention after securing a fuel cell supply contract for a U.S. data center.

Doosan FuelCell showed a double-digit increase, and Bumhan Fuel Cell also rose 9%, leading to concurrent strength in the related sector.

These factors make it an attractive consideration for mid- to long-term investment.

Furthermore, due to a short-term correction, a pricing advantage has emerged, making the power equipment sector a segment that should be given stable attention at this time.

South Korea possesses high competitiveness in the field of ultra-high voltage large transformers. Globally, there are only three companies, including Hyosung Heavy Industries, capable of producing ultra-high voltage large transformers, and only two countries: Korea and Germany.

Currently, the order backlog for the top three power equipment companies totals 30 trillion won, with orders continuing to accumulate. This clearly demonstrates the superiority of Korean companies in the global supply shortage.

As AI data centers grow in scale, the corresponding demand for power equipment also increases.

In particular, transformers are one of the core components that must be installed first in AI data center construction, so demand is expected to grow with the expansion of data centers.

When investing in power equipment stocks, both large-cap and small/mid-cap stocks can be considered. Large-cap stocks like Hyosung Heavy Industries can be a stable choice.

On the other hand, small/mid-cap stocks like Iljin Electric are also noteworthy, instead of potentially heavier large-cap stocks. Iljin Electric has recently undergone sufficient price and time corrections, so there is a possibility of a price surge if trading volume increases.

The power infrastructure sector is expected to see continuous demand not only in transformers but also in the cable and wire segment. Data center expansion, aging power grid replacement, and the addition of large-scale factories such as semiconductor clusters necessitate power infrastructure expansion.

Therefore, while ultra-high voltage transformers are key components, infrastructure like wires and cables should also be a focus.

Sometimes transformers move first, followed by wire-related stocks.

Currently, wire companies continue to show strong performance, and export indicators are also favorable, suggesting concurrent growth across the power infrastructure sector.

These busduct products act like the core arteries of AI data centers, and demand is rapidly increasing.

Driven by surging demand, Kwangmyung Electric is seeing heightened expectations for achieving sales in the trillions of won. Its order backlog also approaches 5 trillion won, raising expectations for future performance growth.

The power infrastructure sector is characterized by surging demand coupled with supply constraints. In particular, transformer production requires highly skilled personnel, making it difficult to rapidly increase output even with facility expansion.

Beyond data centers, demand for power equipment and wires is surging across various front-end industries such as renewable energy transition and large-scale factory expansion, making these supply constraints a factor that further enhances the value of orders.

When selecting stocks to invest in within the power sector, it is advisable to prioritize top-tier stocks with high market capitalization. This is because stable companies are more likely to lead to greater growth.

It is also suggested that if a stock consistently shows upward quarterly earnings, one can invest with little concern. Kwangmyung Electric was cited as a stock that meets these criteria.

The construction sector is gaining new rebound momentum due to recent changes in business trends. Moving away from a focus on residential construction, non-residential sector projects are actively underway, reflecting various growth drivers.

Major construction companies such as Hyundai E&C and GS E&C are actively pursuing overseas project orders and diversifying their portfolios, which is also interpreted as a positive sign.

While the U.S. has high nuclear power plant design technology, its construction procurement capability is relatively lower compared to Korea.

This is because there has been almost no experience in nuclear power plant construction within the U.S. since the Three Mile Island accident. Therefore, combining U.S. design technology with the excellent construction capabilities of Korean construction companies is expected to be a key strategy for entering the U.S. nuclear power market.

Construction stocks tend to react first whenever news related to nuclear power emerges, often leading to a certain level of price increase already.

Therefore, at a point where prices have already formed to some extent, as is currently the case, maintaining a mid- to long-term perspective and focusing on pull-back periods is suggested as a prudent investment strategy.