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Doosan, local power firms take hit as gov't moves to phase out nuclear power

All News 11:21 June 20, 2017

SEOUL, June 20 (Yonhap) -- Doosan Heavy Industries & Construction Co., the country's top power equipment maker, and other local power plant-related firms continued to take losses for the second day Tuesday, after President Moon Jae-in made clear the government's plan to scrap the building of new nuclear power plants and phase out those in operation.

Doosan Heavy was trading at 21,800 won (US$20) on the Seoul bourse as of 10:25 a.m., up 1.63 percent from the previous session's close. On Monday, Doosan Heavy fell 11 percent to the lowest level in almost one year.

The state-run utility firm, the Korea Electric Power Corp. (KEPCO), also fell 1.78 percent to 41,300 won, following a 3.1 percent fall the previous session.

KEPCO Engineering & Construction Co., a firm specialized in the maintenance of power plants, dropped 4.94 percent to 20,200 won. In the previous session, it shed 11 percent.

At a ceremony to mark the permanent shutdown of the country's oldest nuclear power plant, the Kori-1, on Monday, the president said his government will scrap all existing plans for new nuclear power plants and won't extend the operations of any aged reactors nearing the end of their initial life cycles.

"We will abolish our nuclear-centered energy policy and move toward a nuclear-free era. We will completely scrap construction plans for new nuclear reactors that are currently under way," Moon said.

The president also hinted at halting the ongoing construction of two new nuclear reactors, saying the government will "secure a public consensus" on their fate in the near future, while reiterating his earlier pledge to permanently shut down at least 10 aged, coal-fired power plants before his five-year term ends, a move aimed at reducing greenhouse gas and fine dust emissions.

President Moon Jae-in delivers a speech in a ceremony marking the permanent shutdown of South Korea's first nuclear reactor, the Kori-1, in Busan, 450 kilometers south of Seoul, on June 19, 2017. (Yonhap)

BNK Investment & Securities set its target price for Doosan Heavy at 28,000 won, adding that the country's move to scale back its reliance on nuclear power energy could affect Doosan Heavy's stock price.

"Scrapping nuclear power plants currently under construction may reduce Doosan Heavy's order backlog," the brokerage house said.

Samsung Securities also said there is no upward momentum for Doosan Heavy due to policy uncertainties.

"Recent drops in its stock price have been excessive, but there are no other issues to buttress it up," said Han Young-soo, an analyst at Samsung Securities.

Last year, around one-third of power in the country was supplied by nuclear power plants. South Korea has 24 nuclear reactors not counting the Kori-1 unit.

In contrast, renewable energy-related stocks surged for the second day on hopes for rising demand under the Moon administration's policy drive.

Seoul said government policy aims to boost power supplies from clean and renewable energy sources, with the goal of jacking up the use of renewable energy to 20 percent of the country's total power generation by 2030.

OCI Co., the country's leading solar panel maker, added 6.05 percent to 98,100 won, and Hanwha Chemical, a smaller local rival, climbed 4.83 percent to 30,400 won.

KOGAS also added 2.35 percent to 52,200 won.

A file photo of the Kori power plant in Busan (Yonhap)


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