[Reuters]
[Reuters]

Construction stocks have continued to rally on growing expectations that nuclear power plant construction in the United States will accelerate. Analysts say US government support allowing key equipment to be ordered before final investment decisions could bring forward contract awards for South Korean firms.

Korea Exchange data released Wednesday showed the construction sector index rose about 25% this month from the previous month — the largest gain among all Kospi sector indexes so far this month. The rally has been driven by nuclear power beneficiaries Hyundai E&C and Doosan Enerbility, which have climbed 28.22% and 20.27%, respectively, this month. Hyundai E&C surged 14.87% on Tuesday after disclosing the completion of a front-end engineering and design study for a large nuclear power plant in the United States, while Doosan Enerbility rose 10.55% the same day. Both stocks opened higher Wednesday, advancing 4.62% and 2.73%, respectively, from the previous session.

The next question for Hyundai E&C is whether it will secure a contract to actually build a large nuclear power plant in the United States. The company completed the front-end engineering and design, or FEED, study for Project Matador, a development being pursued near Amarillo, Texas. FEED is the stage in which design, project costs, safety and construction timelines are examined in detail before actual construction begins.

For Hyundai E&C to take on the actual construction work, the project must progress to an engineering, procurement and construction contract. The company is currently pursuing an EPC contract for the project, under which a construction company handles everything from design and equipment procurement to construction. Project Matador calls for four Westinghouse AP1000 reactors, and whether Hyundai E&C — having completed the FEED study — will be awarded the EPC contract remains to be seen.

Beyond large reactors, Hyundai E&C is also expanding its footprint in the US small modular reactor market. The company is participating in Holtec International's SMR project and has secured exclusive rights to build the first reactor and eight subsequent units under TerraPower's Natrium nuclear project.

Doosan Enerbility, a leading nuclear power stock, is drawing expectations that new reactor orders in the United States could come sooner than anticipated. Analysts say US government support for early equipment procurement could also bring forward order timelines for South Korean companies.

The US Department of Energy announced in June a $17.5 billion financing package covering 10 Westinghouse AP1000 large reactors — two reactors each at five sites. The support is designed to allow orders for key components, which can take years to manufacture, to be placed before a final investment decision. By enabling design, licensing and equipment manufacturing to proceed simultaneously, the initiative is expected to shorten large reactor construction timelines by roughly three years.

Earlier orders would allow Doosan Enerbility — a key long-lead equipment supplier for the AP1000 — to receive contracts sooner, with earnings recognition also moving forward. "We expect Doosan Enerbility's orders to be pulled forward as a key long-lead component supplier for the AP1000, marking the start of full-scale nuclear equipment production," said Jung Hye-jung, an analyst at KB Securities.

Jang Moon-jun, also an analyst at KB Securities, said the second half of 2026 through 2027 represents "the most critical period for nuclear investment," adding that the company is building a pipeline across all segments of nuclear power — large reactors, SMRs, Generation 3.5 and Generation 4 alike.

As US nuclear construction accelerates, the opportunity for South Korean nuclear suppliers to win orders could broaden across the industry. "We expect the pace of large nuclear power plant construction in the United States to accelerate, driving a corresponding increase in related equipment supply," said Jang Nam-hyun, an analyst at Korea Investment & Securities. "South Korean companies are also expected to enter the AP1000 value chain and secure new orders."


kacew@heraldcorp.com