Construction: Construction 110: Overseas Nuclear Power Plant News Spells Opportunities
The author is an analyst at NH Investment & Securities. He can be reached at [email protected] – Ed.
The latest news on overseas nuclear power plant projects, including the placement of new contracts in the Czech Republic, bodes well for builders, especially the limited number of them who can run EPC projects.
New construction projects for nuclear power plants announced, also for the Czech Republic
According to media reports, Korea Hydro & Nuclear Power (KHNP) is pursuing some construction projects for nuclear power plants overseas. This month the Czech government plans to issue a Request For Proposal (RFP) for the construction of a W8.0tn nuclear power plant (1.0 ~ 1.2 GW) in Dukovany. KHNP, Westinghouse (USA), EDF (France), Rosatom (Russia) and China General Nuclear Power Group are fighting for the contract. The winner will be announced in 2022. In July 2020 the Czech government accepted the EPC model proposed by KHNP. In the meantime, KHNP is also in talks about a possible participation in the El Dabaa project (Egypt), for which Rosatom (a leading electricity producer in Russia) has been commissioned to build four 1.2 GW nuclear power plants. It is noteworthy that in March 2019, Rosatom received approval from the Egyptian government and Russia agreed to finance 85% of the total construction costs.
Due to the nature of a nuclear power plant project, it takes several years to select a location and obtain approval. In view of this, there tends to be a large time gap between the first media presence and the actual award of the contract. The Czech nuclear power plant project as well as projects in Great Britain and Saudi Arabia have been mentioned in media reports since 2018. Given that new domestic nuclear power plant projects are unlikely to be undertaken at this time, a designer with an EPC-centric export model is more likely to ultimately prevail than one with a UAE project-like business model (i.e. a stake in the whole process). Because of the special safety and construction levels required, there are only a handful of construction companies that can participate in nuclear power plant projects. We would like to point out that Hyundai E & C, Daewoo E & C and Samsung C & T have gained experience through the Baccarat project in the UAE, the Shin Hanul No. 1 and 2 and Shin-Kori No. 5 and 6 projects which required a new type of pressurized light water reactor (APR1400).
The most important news on construction and real estate of the last week
On March 7, a Seoul city official announced that preliminary negotiations for the Kwangwoon University Railway Station development project will be completed within this month. Construction is scheduled to start in the first half of 22nd. The project includes the construction of a 46-story logistics complex (2,466 mixed-use residential buildings) in Wolgye-dong, Nowon-gu. After HDC Hyundai Development was selected as the designer in 2017, the project has now started in earnest. It is noteworthy that Gwangwoon University Station is a stop on the GTX-C line. Given plans to develop / improve transportation conditions in the area, property prices nearby appear to be undervalued compared to other areas in Seoul. HDC Hyundai Development’s shares are currently trading at a 2021 P / E of 5.4 and appear attractively valued relative to the industry average.