Korea's First US Investment Project and the Hormuz Deployment: The Announcement Becomes a Package, and the Alpha Stays in the Contracts

Sun, 06 Sep 2026 14:30:00 +0900

Connecting context: the fourteen Korean valuations noted that the list of good companies and the list of cheap stocks do not overlap, and the memory big three in August noted that the market pays for the character of shareholder returns, not their size. This piece applies the same lens to Project No. 1. The selection headline and each company’s contracts are different events, and the market has already paid heavily for the former.

TL;DR

For Project No. 1, a combined-cycle gas plant in Encinal, Texas is the base case. Under the July 28 report, the project cost is $19.8 billion, with a 1.4GW gas turbine phase and a 5GW combined-cycle phase totaling about 6.4GW. But as of September 6 there is no official designation notice, and the United States is asking Korea to raise the project cost to $25 billion. [Fact: media reports] The finish-within-September timeline that Industry Minister Kim Jung-kwan gave in Washington on September 3 is a target, not an announcement date.
The odds have risen that the announcement will not come as a standalone event. On September 3 and 4, the presidential office confirmed a review of a Hormuz deployment. Under review is a force of about 150 personnel built around a P-8A maritime patrol aircraft, a logistics support ship, and EOD personnel. Iran has warned it would treat a deployment as entering the war, and part of the ruling party along with the Rebuilding Korea Party opposes it. [Fact: media reports] The announcement sequence reads as bundled together: the deployment decision, summit contact at the UN General Assembly starting September 22, the Project No. 1 announcement, and confirmation on semiconductor tariffs. [Inference]
Scenario probabilities split on whether the deployment happens. If the deployment is decided, I put a compromise announcement at 55%, delay or scale-back at 20%, and an expanded package at 25%. If the deployment is blocked, those become 35%, 50%, and 15%. Putting the odds of the deployment going ahead at 60%, the unconditional weights are 47 to 32 to 21. All three numbers are subjective judgments based on the strength of public evidence.
Nuclear is unlikely as a standalone No. 1 but the leading hypothesis as part of a package. A March 20 report naming nuclear the leading candidate sent GS E&C up 22.54% and Daewoo E&C up 18.18%, and an August 24 report on a Westinghouse equity stake sent nuclear stocks up 10% to 20% before the Industry Ministry denied it. [Fact: exchange data, media reports] Making a project with no confirmed order the standalone No. 1 is a hard sell, but bundling nuclear’s FEED work and long-lead equipment with the first gas tranche gives both sides a story that fits their needs. The real issue is reactor type and control, between AP1000 and APR1400. [Inference]
The stocks have already moved a great deal. Since July 28, BHI is up 50.6%, GS E&C 34.3%, Hyundai E&C 26.9%, and Doosan Enerbility 22.4%, and they gave back 8% to 14% over the week after the August 28 report of the cost-increase demand. Samsung Electronics and SK Hynix were flat that same week. [Fact: exchange data]
This basket also trades on geopolitical headlines together. On August 31, while the KOSPI fell as much as 3.55% intraday before closing up 0.46%, Daewoo E&C, Doosan Enerbility, Hyosung Heavy Industries, KEPCO E&C, Hyundai E&C, and BHI fell 4% to 8%. On August 25, the same stocks had risen 10% to 20%. [Fact: exchange data]
Even with Korean capital in the deal, equity returns tilt 90 to 10 toward the United States once principal and interest are recovered. That is the structure of the joint fact sheet. [Fact: White House fact sheet] So the alpha in Korean listed equities lies not in the equity stake but in how gas turbine, heat recovery steam generator (HRSG), and construction contracts get allocated, and to whom.
The stock verdicts are Watch for BHI, Wait for Doosan Enerbility, and Wait for Hyundai E&C. BHI sits where confirmed HRSG orders for the 5GW combined-cycle phase would directly change its earnings outlook. Doosan Enerbility has a US gas turbine order track record, but its Encinal allocation is unconfirmed. Hyundai E&C depends first on the guarantee terms of the main EPC contract.
I state plainly what is unconfirmed. Encinal’s project sponsor, water rights, and power offtaker are not confirmed by public US sources. The claim that Hyundai E&C disclosed completion of FEED (front-end engineering design) work in August is also unconfirmed. The actual FEED contract dates to October 2025, the work finished at the end of April, and the main EPC contract is targeted for the second half. [Blocked: insufficient public evidence]

Key Framing

Designation and order-winning are different events. Even if the government names Texas as Project No. 1, whether the plant’s turbines come from Changwon, whether its boilers come from Haman, and whether a Korean company handles construction are all determined by separate contracts, especially under a structure where Korean capital’s equity return shrinks to 10% after principal and interest are recovered. The market has paid 7% to 51% for the expectation of designation since July 28, and gave back part of that on the late-August cost-increase demand. What will move these stocks going forward is not the headline on announcement day but the scope, advance payments, and liability caps in the individual supply contracts that follow. The Hormuz deployment is a variable that can pull the announcement forward or push it back, not one that changes the content of the contracts.

1. What Is Confirmed and What Is Not

First, here are the results of checking the claims now circulating widely. The reference date is September 6, 2026, and share prices are the September 4 close.

Claim	Confirmed fact	Correction
Project No. 1 has been locked in as the Texas gas plant	As of the July 28 report this is at the negotiation stage, and as of September 6 there is no official designation notice	The lock-in is a media report, not an announcement
Announcement in early September	Minister Kim Jung-kwan said in Washington on September 3 that the goal is to finish within September, not early September	September is the target window, not a date
Project cost of $19.8 billion	This is the figure from the July 28 report. On August 28 a report said the US is demanding an increase to about $25 billion	Not a confirmed project cost, but two figures still under negotiation
$25 billion would breach the annual cap	The joint fact sheet’s annual funding cap is $20 billion. Total project cost, Korea’s investment amount, and annual disbursement are different concepts	The project-cost figure alone cannot establish a cap breach
Fermi America has no customers	On August 10 it announced a binding 222MW, 15-year lease agreement worth $6.5 billion with TensorWave. The 650MW figure is the total expansion capacity that includes that agreement	The no-customers assessment is outdated, but the 15-year contract value should not be read as cash in hand or as nuclear construction financing
Hyundai E&C disclosed FEED completion on August 24	No such disclosure is confirmed. The FEED contract was signed October 24, 2025, the work ended in late April 2026, and the main EPC contract is targeted for the second half	Attributing the August 25 rally to this disclosure is incorrect
KOSPI plunge on August 31	The KOSPI fell as much as 3.55% intraday before closing up 0.46% at 6,820.02	It was a day when only nuclear and Korea-US investment names fell 4% to 8%

[Fact: White House and USTR fact sheets, company announcements, exchange data, media reports]

The August 25 rally has a different backstory. On August 24 a report said KEPCO was considering an equity stake in Westinghouse, and the next day KEPCO E&C rose 20.27%, Hyundai E&C 14.87%, BHI 13.80%, Daewoo E&C 11.80%, and Doosan Enerbility 10.55%. The Industry Ministry denied the equity stake plan that same day. [Fact: media reports, exchange data] Moves of 10% to 20% in a single day on a report that was then denied say something about the current state of this theme.

It is also worth noting what US local reporting adds to the domestic coverage. In Louisiana, local media reported that even on the day of Hyundai Steel’s September 4 groundbreaking, an air quality permit was still needed and resident opposition remained. Groundbreaking, completed permitting, main construction, and commercial production are different stages. In Indiana, SK Hynix broke ground on August 27 on an advanced packaging facility worth more than $4 billion. The structure has wafers made in Korea assembled and tested in the United States, so reading the US investment as a relocation of front-end fabrication is incorrect. [Fact: local reporting, company announcements] By contrast, for Encinal, Texas, I could not find US local public sources to independently confirm the project sponsor, water rights, or a firm power purchase agreement. [Blocked: no US primary source]

2. Why the Announcement Becomes a Package

From July 28 to the fourth quarter. Green marks confirmed events, amber events in progress, magenta the schedule ahead. The government's target to wrap up within September is a target, not an announcement date, and the catalyst that actually reaches the stocks is not the announcement but the individual contract disclosures that follow.

View as table

When	Event	Status
Jul 28	Reports name Texas Encinal as Project No. 1, $19.8bn	Confirmed
Aug 14	US warns the 15% tariff cannot hold if projects slip	Confirmed
Aug 16-18	Trump’s ’no thanks’ remark, joint drills scaled back	Confirmed
Aug 28	Reports that the US asked to raise the budget to $25bn	Confirmed
Sep 3-4	Presidential office confirms Hormuz deployment review	In progress
During Sept	Government target to wrap up Project No. 1	In progress
From Sep 22	UN General Assembly high-level week	Scheduled
Q4 onward	Individual supply contracts disclosed	Scheduled

After the first report on July 28, two things overlapped in August. One is that the United States explicitly linked the investment to tariffs. On August 14, the US warned it could not keep the 15% tariff rate if the project fell behind schedule, and between August 16 and 18, President Trump said Korea had not responded to a request for cooperation on Hormuz and ordered a scale-back in joint military exercises. The other is the August 28 demand to raise the project cost. The demand to raise it from $19.8 billion to $25 billion forces a recalculation of returns and the benchmark rate, and pushes the announcement back by that much. [Fact: media reports]

A third variable arrived on September 3 and 4. The presidential office confirmed a review of a Hormuz deployment. The forces under review are a P-8A maritime patrol aircraft, a Soyang-class logistics support ship, and Navy EOD personnel, totaling about 150 people. No final decision has been made. Ruling-party lawmaker Lee Ki-heon said he could not agree to a deployment under any name, and Rebuilding Korea Party floor leader Kim Joon-hyung asked why a deployment was being considered for a war of aggression. Iran warned it would treat any Korean action against it in the Hormuz Strait as direct military involvement. On September 5, a senior US official said Washington was still waiting for Korea’s decision. [Fact: media reports]

Put these three variables together and the shape of the announcement changes. The natural reading of the government’s finish-within-September timeline is a bundled sequence: the deployment decision, summit contact between Korea and the US during the UN General Assembly high-level week starting September 22, the Project No. 1 announcement, and confirmation that semiconductor tariffs will not leave Korea worse off than competing countries. A delayed announcement is not by itself a bad sign; it can be a sign of package negotiation. [Inference: a negotiation hypothesis, not a confirmed agreement]

The deployment decision changes the spread of outcomes. If the deployment is approved, the odds of a compromise announcement (A) rise; if it stalls, the balance tips toward delay or scale-down (B). Assuming a 60% chance of deployment, the unconditional odds are 47 to 32 to 21. All three are subjective judgements based on the weight of public evidence, not on confirmed deal terms.

View as table

State	A compromise	B delay or scale-down	C expanded package
Deployment approved, parliamentary consent in sight	55%	20%	25%
Deployment stalls or fails	35%	50%	15%
Unconditional (60% deployment assumed)	47%	32%	21%

If the deployment is decided, there is more room for the US to walk back part of the $25 billion demand or accept staged payments. If the deployment is blocked in the National Assembly, the 25% tariff threat, Section 301, and the Coupang matter come back as leverage. For reference, there are two Section 301 investigations that touch Korea: a manufacturing overcapacity investigation covering 16 economies launched on March 11, and a separate investigation petitioned by Coupang investors in January. Neither has produced a result yet. [Fact: USTR, media reports]

The energy picture has also changed character. Hormuz transit volume has fallen from 21.6 million barrels a day before the conflict to 4.9 million barrels, and with US-Iran fighting resuming in the first week of September, Brent crude is at $95 to $96. [Fact: media reports] The blockade that began in late February was interrupted once by an April ceasefire and has since resumed. More than 70% of Korea’s crude oil imports pass through this strait. Long-term US LNG purchases have become a Korean necessity rather than a US demand, and that raises the odds of a Louisiana or Alaska LNG project becoming Project No. 2 by that much. Despite the renewed rise in oil prices, the won strengthened to 1,359.3 won per dollar on September 3, which actually eases the foreign exchange burden of the $20 billion in annual disbursements. [Fact: media reports, market prices]

3. Where Nuclear Sits: Standalone No. 1 or Part of the Package

Nuclear power has never been out of the running for Project No. 1. On March 20, a report that a US nuclear plant was the leading candidate for No. 1 sent GS E&C up 22.54% and Daewoo E&C up 18.18%, and that was this theme’s first rally. Hyundai E&C fell 3.24% that same day. [Fact: media reports, exchange data] When the US linked tariffs to a warning on August 14, the candidates named also included Texas gas, Louisiana LNG, and NuScale’s small modular reactor (SMR) in Tennessee. [Fact: media reports] Since the previous section focused on gas, here is why nuclear deserves its own treatment.

The ladder of Project No. 1 candidates. A qualitative reading of the weight of public evidence, with no probabilities attached. Nuclear is unlikely as a standalone No. 1 but is the leading negotiation hypothesis when bundled as FEED and long-lead equipment alongside a first gas tranche. The right column lists what must be confirmed for each candidate.

View as table

Candidate	Likelihood as No. 1	What to confirm
Texas Encinal combined cycle	Most likely	Owner, water, long-term power sales, financing, Korean supply share
Gas first tranche + nuclear front-end bundle	Leading negotiation hypothesis	Separate non-binding pacts from firm orders; no double-counting
Fermi America, 4 AP1000 units	Low as sole No. 1, key mid-term	Per-unit licensing, financial close, main EPC
TerraPower Natrium follow-on, up to 8 units	Low now, key follow-on	Individual sites and orders, caps on completion and price guarantees
Holtec and Entergy SMR-300	Low for now	Site, customer, permits, main contract
Louisiana and Alaska LNG	Moved up to No. 2 candidate	Cost, financing, long-term offtake
Prolonged renegotiation, phased investment	Key downside	Whether cost, water and guarantee issues resolve

Start with why nuclear is a hard sell as a standalone No. 1. What President Trump needs is not a nuclear plant that actually generates electricity. An investment figure, an order, a groundbreaking, and a jobs commitment are enough to make a political win. So a long construction timeline alone cannot rule nuclear out. [Inference] The more likely source of resistance is Korea. Taking on uncertain construction costs and completion risk in a big way on the very first project is difficult, and it runs into the special act’s commercial-reasonableness test and the parliamentary consent process. US nuclear projects themselves are at uneven stages of ordering. Fermi America’s main EPC contract is targeted for the second half. The company had a $150 million customer contract canceled in January, and in April its founder and CEO stepped down after a conflict with Secretary Lutnick. TerraPower’s August 14 agreement is a framework for up to eight follow-on units, not an individual order, and Holtec’s August 4 agreement is at the evaluation stage for a candidate project. [Fact: company announcements, media reports] Naming a project with no confirmed order as No. 1 gets you an announcement, but not execution.

Here is why nuclear looks like the leading hypothesis as part of a package. Bundling nuclear’s FEED work and long-lead equipment agreements together with the portion of the gas plant executed first lets the United States announce a large headline number that includes nuclear, while Korea splits its execution between confirmed orders and non-binding agreements. [Inference: a negotiation hypothesis, not a confirmed agreement] The US Department of Energy’s June 23 move to offer up to $17.5 billion in conditional loan commitments for the supply chain behind as many as ten large reactors across up to five sites points the same way. [Fact: US Department of Energy] The expanded-package scenario adds an Alaska LNG equity stake and purchase agreement, a Westinghouse equity SPC or a NuScale small modular reactor, and Philly Shipyard vessels to this bundle.

The real issue in the nuclear track is reactor type and control. The United States wants to attach Korean capital and construction to Westinghouse’s AP1000 (1.1GW), while Korea wants the APR1400 (1.4GW) and KHNP in control. The structure reported on August 24 had a Korea-US joint special purpose company acquiring up to a 20% stake in Westinghouse and building ten AP1000 units by 2030, and the Industry Ministry denied it on the 25th. [Fact: media reports] Commentary the same week pointed out that an equity stake or joint venture does not guarantee decision-making authority, volume, or intellectual property on individual projects, and Toshiba’s losses after acquiring Westinghouse were repeatedly cited as the comparison case. [Fact: media reports] Korean capital going in does not mean a Korean-design reactor gets chosen, and there is not enough basis to automatically assume participation by KHNP, KEPCO E&C, and Daewoo E&C. Reactor type and the design, manufacturing, and construction contracts come first.

Where Korean companies fit differs by scenario.

Scenario	What it involves	Where Korean companies fit	What to confirm
Korean subcontract role (most likely)	Korean design, equipment, and construction combined as subcontracts within the AP1000 build	KEPCO E&C design (brokerage estimate of about 300 billion won per unit), Doosan Enerbility main equipment and large forgings, Hyundai E&C, Daewoo E&C, and Samsung C&T on construction	Design scope and contract value, forging volume
Westinghouse equity SPC	Korea-US joint SPC taking up to a 20% stake	Doosan and KEPCO E&C hope for volume priority, against the loss-sharing burden on KEPCO and KHNP	The SPC’s loss-sharing terms and decision-making authority
Fermi main EPC contract	Part of a four-unit AP1000, 11GW complex	Hyundai E&C. Would be Korea’s first EPC contract on a large US nuclear plant if it happens	The owner’s governance, financial close, guarantee caps
Small modular reactors	Holtec’s SMR-300 (two Palisades units, Gulf South), TerraPower’s sodium reactor, X-energy, NuScale	Hyundai E&C construction, Doosan equipment (a reservation agreement for forgings on up to 16 X-energy units)	Site-by-site permitting and orders, the substance behind the Tennessee project

[Fact: company announcements, media reports. The 300 billion won per unit figure is NH Investment & Securities’ February estimate]

One distinction is worth making. The Palisades fuel loading that Holtec announced in late August is the restart of an existing plant, not a new SMR order. The NuScale project in Tennessee has no specified site, and TVA’s Clinch River project in the same state is a separate matter, built around GE Hitachi’s BWRX-300. [Fact: company announcements, media reports] Lumping together projects with similar names produces the wrong list of beneficiary stocks.

The stock-price implication mirrors the section that follows. Both nuclear rallies, on March 20 and August 25, were reactions to media reports, and the second was a reaction to a report that was later denied. The next event that will move stocks on the nuclear track is not a selection announcement but disclosure of a confirmed reactor type and a design or equipment contract.

4. How Much Have the Stocks Already Priced In

How much is already priced in. Since the first report on July 28, the names tied to the investment have risen 7% to 51%. The right column is the pullback in the week after the August 28 report that the US asked for a larger budget. Samsung Electronics and SK Hynix were flat over the same week, so the pullback belongs to this theme, not the market.

View as table

Stock	Since Jul 28	Last week (since Aug 28)	Sept 4 close
BHI	+50.6%	-8.3%	60,000 won
GS E&C	+34.3%	-7.8%	34,250 won
Hyundai E&C	+26.9%	-7.1%	119,700 won
Daewoo E&C	+25.5%	-14.4%	16,850 won
Doosan Enerbility	+22.4%	-10.2%	79,200 won
Hyundai Steel	+22.1%	+1.6%	31,500 won
KEPCO E&C	+21.2%	-12.1%	107,600 won
Samsung C&T	+20.3%	-2.1%	367,000 won
Hyosung Heavy	+17.6%	-13.4%	2,732,000 won
LG Energy Solution	+14.2%	-3.1%	358,500 won
POSCO International	+8.5%	+3.8%	54,700 won
Hanwha Ocean	+7.2%	-1.9%	86,800 won
HD Hyundai Heavy	-3.2%	-4.5%	436,500 won
KEPCO	-4.5%	-1.2%	32,150 won
Samsung Electronics	+16.1%	-0.6%	255,500 won
SK Hynix	+6.3%	-0.4%	1,647,000 won

From the first report on July 28 through September 4, BHI rose 50.6%, GS E&C 34.3%, Hyundai E&C 26.9%, Daewoo E&C 25.5%, Doosan Enerbility 22.4%, and KEPCO E&C 21.2%. Over the same period Samsung Electronics rose 16.1% and SK Hynix 6.3%, so the broader market was strong too, but the Korea-US investment names rose by more. [Fact: exchange data]

The pullback is an event specific to this theme. Over the week after the August 28 report of the cost-increase demand, Daewoo E&C fell 14.4%, Hyosung Heavy Industries 13.4%, KEPCO E&C 12.1%, Doosan Enerbility 10.2%, and BHI 8.3%. Over the same week, Samsung Electronics fell 0.6% and SK Hynix 0.4%. That means expectations came out of this theme specifically, not the market as a whole. Daewoo E&C, which had the largest pullback, is the stock that had twice rallied sharply on expectations alone, in March and July. Samsung C&T and POSCO International, which had the smallest pullbacks, are the stocks that had drawn the least expectation to begin with.

A basket that moves on the same headline. On August 31, Daewoo E&C, Doosan Enerbility, Hyosung Heavy, KEPCO E&C, Hyundai E&C and BHI fell 4% to 8% while Samsung Electronics and SK Hynix rose. On August 25, in the right column, the same names had risen 10% to 20%. Whatever the fundamentals, they ride geopolitical headlines together.

View as table

Stock	Aug 31	Aug 25
Daewoo E&C	-7.62%	+11.80%
Doosan Enerbility	-6.46%	+10.55%
Hyosung Heavy	-6.03%	-1.33%
KEPCO E&C	-4.90%	+20.27%
Hyundai E&C	-4.34%	+14.87%
BHI	-3.98%	+13.80%
GS E&C	-2.29%	+3.24%
KEPCO	-2.00%	+3.81%
Hyundai Steel	-1.94%	+7.50%
HD Hyundai Heavy	-1.64%	+1.98%
Hanwha Ocean	-0.56%	+3.84%
Samsung C&T	+0.40%	+0.69%
POSCO International	+1.90%	+0.56%
LG Energy Solution	+2.16%	-3.45%
Samsung Electronics	+1.17%	+0.00%
SK Hynix	+1.27%	+0.42%

The fact that this basket trades on geopolitical headlines together is also measurable. On August 31, the KOSPI fell as much as 3.55% intraday on Fed Chair Powell’s remarks and a sell-off in US tech stocks, then closed up 0.46% on buying in large-cap semiconductor names. Samsung Electronics rose 1.17% and SK Hynix 1.27%. Yet Daewoo E&C fell 7.62%, Doosan Enerbility 6.46%, Hyosung Heavy Industries 6.03%, KEPCO E&C 4.90%, Hyundai E&C 4.34%, and BHI 3.98%. [Fact: exchange data] Only these stocks fell on a day the index closed higher, the mirror image of the same stocks rising 10% to 20% on August 25. If a deployment decision is followed by a phase where Iranian retaliation becomes real, this basket will be the first to shake, regardless of fundamentals.

5. The Alpha Is in the Contracts, Not the Equity

Look again at the structure of the joint fact sheet. Returns on the capital Korea puts in are split 50 to 50 until principal and interest are recovered, and 90 to 10 in favor of the United States after that. [Fact: White House fact sheet] The upside on Korea’s equity stake effectively ends at recovery of principal and interest. For Korean listed companies to make money from this project, they need supply contracts, not equity. The questions are who builds the gas turbines, who supplies the HRSGs, and on what terms someone takes on construction.

This is where the two countries’ interests diverge. The United States wants to expand US production, equipment, and technology supply chains, while Korea wants to protect domestic manufacturing and equipment exports. A division of labor that pairs US technology and local construction with Korean manufacturing is the likely compromise. [Inference] The package hypothesis in section 3 is one form of that compromise, and it is not a confirmed agreement.

BHI: The Combined-Cycle Order Over the Gas Plant

The HRSG that BHI makes uses gas turbine exhaust heat to raise steam and drive an additional steam turbine. It goes into combined-cycle plants only, not simple gas turbine generation. Rather than the roughly 6.4GW Encinal project as a whole, the real variable for this company is actual orders for the 5GW combined-cycle portion. [Fact: equipment configuration]

The company’s operating track record is clear. HRSGs accounted for 78.3% of 2025 revenue, 2025 orders hit a record 1.8 trillion won, and the company holds the top global share in HRSGs for combined-cycle plants. A confirmed contract also exists to supply two 800MW-class units worth 188.3 billion won to a Toshiba affiliate for Japan’s Sodegaura power plant. [Fact: company data, media reports] That is evidence of large-project supply capability, not a guarantee of a US order.

The price has already run up. At 60,000 won, the trailing price-to-earnings multiple is 28x to 36x depending on the data provider’s trailing earnings-per-share figure. Reported trailing EPS splits between 1,682 won and 2,107 won, so I give the multiple as a range. On September 4, IBK Securities raised its target price from 43,000 won to 62,000 won, citing rising HRSG orders, not nuclear power. [Fact: brokerage research] This is not an unknown stock, and it is not confirmed whether expected earnings from a specific US contract are already baked into estimates. The verdict is Watch. The investment case holds only once the supplier selection, contract value, delivery schedule, advance payment, and margin are confirmed.

Doosan Enerbility: Manufacturing and Service Revenue Over Full Construction Liability

Doosan Enerbility has tangible evidence behind it. In March, it won an order for seven 380MW-class gas turbines bound for the United States, to be delivered starting in May 2029, bringing its cumulative US gas turbine orders to twelve units. On August 14, it announced a main equipment contract with TerraPower. [Fact: company announcements, media reports]

Earnings back this up too. Second-quarter operating profit came in at 314.3 billion won, beating consensus by 17.7%, and the order backlog at the end of June hit a record 26.35 trillion won. The annual order target is 13.3 trillion won. [Fact: company announcements]

But having US orders is not the same as being confirmed as an Encinal supplier. Existing orders should not be reread as Encinal orders. A 5GW combined-cycle plant would need more than ten H-class turbines, and with GE Vernova, Siemens, and Mitsubishi facing long lead times, there is some chance of a partial allocation, but that is a possibility, not a contract. [Inference]

The valuation is not easy either. At 79,200 won, the stock trades at close to 280x trailing earnings per share of 283 won. With trailing earnings this low, a simple multiple explains little, and a sum-of-the-parts approach is needed to separate the core energy business, the Bobcat stake, and net debt. After the second-quarter results, 7 of 12 brokerages cut their target prices. The company’s order target and backlog were already disclosed in July, so they should not be recalculated as fresh good news. [Fact: brokerage research] The verdict is Wait. Any further alpha will come from new orders arriving faster than expected and from service revenue, not from the existing backlog.

I also note the grounds for holding off on adding to the position. Neither the Project No. 1 text nor any disclosure yet specifies a Doosan gas turbine allocation. Estimate cuts have continued since the second quarter. After the late-August pullback, the share price is sitting near its 60-day moving average. The verdict would change once an allocation is specified, estimate cuts stop, and the price recovers.

Hyundai E&C: Guarantee Liability Comes Before Contract Value

Hyundai E&C’s path into US nuclear power has widened. FEED work on four Fermi America AP1000 units was contracted in October 2025, finished at the end of April this year, and the main EPC contract is targeted for the second half. On August 4, the company signed a three-way agreement with Holtec and Entergy on the SMR-300, and on August 14, TerraPower specified completion, price and performance guarantees alongside an EPC agreement covering up to eight follow-on sodium reactors. [Fact: company announcements]

Completing FEED work is not the same as winning the main EPC contract. And the guarantees cut both ways. The easier it becomes for the reactor technology company and the project sponsor to raise financing, the larger the contractor’s contingent liability can grow. A structure is possible in which technology fees and equipment payments go out first, while cost overruns and completion-delay losses land on the contractor later. [Inference] I do not conclude from the currently public wording alone that the guarantee is unlimited.

At 119,700 won, the stock trades at about 30x trailing earnings per share of 3,961 won to 3,992 won. Target prices from roughly ten brokerages average around 165,000 won but range from 96,000 won to 240,000 won. [Fact: brokerage research] The verdict is Wait. Project value can only be calculated once a main EPC contract appears that confirms cost pass-through, a guarantee cap, exemptions for permitting and design changes, and an adequate advance payment.

Stock	Sep 4 close	Trailing P/E	Verdict	Basis for verdict
BHI	60,000 won	28x to 36x	Watch	Earnings outlook changes directly once HRSG orders for the 5GW combined-cycle phase are confirmed
Doosan Enerbility	79,200 won	about 280x	Wait	Has a US gas turbine order track record, but Encinal allocation is unconfirmed and estimate cuts are ongoing
Hyundai E&C	119,700 won	about 30x	Wait	Value can only be calculated once the main EPC contract confirms guarantee caps and advance payment terms

[Fact: exchange data, brokerage research. Multiples are shown as ranges reflecting differences in trailing earnings per share across data providers]

Buying all three names together does not diversify the risk. All three are exposed to the same variables: US power investment and Korean policy execution.

6. Other Tracks: LNG, Shipbuilding, Semiconductors, and Steel

LNG is the track whose character has changed because of the Hormuz blockade. There were reports that a Louisiana LNG export terminal had fallen out of contention over cost and profitability concerns, but while Gulf LNG supply is under strain, long-term US LNG purchases have become a Korean energy security priority. A structure built around purchase contracts, carriers, and floating facilities, rather than equity, is also easier to sell to the National Assembly. POSCO International is already in through equity, steel pipe, and a one-million-ton annual purchase commitment tied to Alaska LNG, and its stock is up only 8.5% since July 28, suggesting less expectation has attached to it. [Fact: media reports, exchange data]

Shipbuilding is a separate track, but it feeds into the same deployment narrative. President Trump referenced ten warships at the G7 in June, and at the July opening ceremony for the Korea-US Shipbuilding Cooperation Center, Secretary Lutnick said he would judge success by hulls built, not by the center itself. If a deployment and shipbuilding get bundled together as security contributions, a Philly Shipyard contract could emerge as an appendage to the package. [Inference] Hanwha Ocean is up 7.2% since July 28 while HD Hyundai Heavy Industries is down 3.2%, suggesting expectations here have cooled.

Semiconductors are a party to the tariff negotiation, not a beneficiary of the energy investment. On September 3, Minister Kim Jung-kwan said a principle of keeping semiconductor tariffs no worse than competing countries was under discussion, and on September 4 the government confirmed that talks on semiconductor investment were ongoing. Samsung Electronics and SK Hynix have no memory front-end fabrication in the United States. If targeted tariffs are keyed to front-end fabrication, additional demands for US capacity investment could follow. There is no confirmed condition linking the energy Project No. 1 designation to an automatic tariff exemption. [Fact: media reports]

Steel is a track where the funding burden can actually be calculated. Hyundai Steel’s Louisiana mill has a total project cost of $5.8 billion, split 50 to 50 between equity and debt, with Hyundai Steel holding 50% of the equity. That puts the base equity burden at $1.45 billion, half of half of $5.8 billion, with cost overruns, guarantees, and any further capital calls on top of that. [Fact: company announcements, media reports]

Cash goes out first, and revenue comes later, on the way to the 2029 target of 2.7 million tons of annual production. The stock, up 22.1% since July 28, has seen almost no pullback.

7. Events That Would Change the Judgment

The nearest catalyst is the government’s finish-within-September timeline, with no exact date attached. When the announcement comes, look first at Korea’s investment amount, the share of Korean-made supply, and how binding the contracts are, not the project name.

Confirmed event	Judgment
Only Project No. 1 selection is announced, with no supplier named	Do not chase any of the three stocks. The announcement date could turn out to be the day that unwinds the front-running since July 28
A binding BHI HRSG contract tied to the combined-cycle scope	Check whether it was already included in existing order guidance, then value it on incremental profit, advance payment, and working capital
Encinal turbines confirmed to a foreign supplier	Remove the project-specific expectation from Doosan. Treat BHI’s boiler as a separate contract
Only the simple gas turbine phase moves forward first	Push back the timing of profit realization for BHI
Hyundai E&C’s main EPC contract clarifies liability caps, cost adjustment, and exemptions	Recalculate project value with the risk reflected
Reactor type is confirmed and a design or equipment contract is disclosed	This is the real catalyst for the nuclear track. Evaluate KEPCO E&C and Doosan Enerbility on contract scope and value, and the contractor on guarantee terms
A Westinghouse equity SPC is revived as an actual agenda item	Look first at the loss-sharing terms and decision-making authority. The equity stake itself is a burden borne by KEPCO and KHNP
Iranian retaliation phase following a deployment decision	Do not add exposure, using the August 31 precedent that confirmed this basket’s geopolitical beta
Deployment falls through and a delay-or-scale-back scenario is confirmed	The 25% tariff, Section 301, and the Coupang matter return as pressure. Avoid order-less theme stocks first

The shared macro failure condition is a slowdown in AI capital spending combined with tighter financial conditions. If US long-term rates, construction costs, and gas prices rise, power sale economics worsen and financial close gets delayed. [Inference] The company-specific invalidation conditions are concrete. For BHI, it is a missed supplier selection and a delayed combined-cycle phase. For Doosan Enerbility, it is a foreign turbine award and weak earnings conversion. For Hyundai E&C, it is unfavorable pricing and completion guarantees. The failure of any one contract is a condition that kills that specific investment case, not one that negates the company’s existing core business value.

Getting the first project right is not, by itself, enough to earn excess returns. Even with Korean capital in the deal, the profit from equipment and technology can flow to the United States while completion risk flows to Korea. The benchmark is not the selection announcement but a contract that spells out supply scope, advance payment, and liability caps.

The stocks mentioned in this piece are examples for analysis and are not a recommendation to buy or sell any specific stock. Responsibility for investment decisions and their outcomes rests with the investor. Share prices are Korea Exchange closing prices as of September 4, 2026, and period returns and daily price changes were calculated in-house from exchange data. The scenario probabilities and the 60% probability of the deployment going ahead are subjective judgments based on the strength of public evidence and are not based on confirmed deal terms. Encinal’s project sponsor, water rights, power purchase agreement, Korea’s funding burden, equipment suppliers, and the guarantee cap in the main nuclear contract could not be confirmed due to insufficient public evidence.

BHI’s earnings per share splits between 1,682 won and 2,107 won depending on the data provider, so the multiple is given as a range, and trailing multiples were not used for relative comparison across the three companies because their business mix and profit recognition differ. The claim that Hyundai E&C disclosed FEED completion in August was not confirmed in public sources and was excluded from the body of this piece. The March 20 and August 25 price changes are based on exchange closing prices, and the Westinghouse equity SPC and the ten AP1000 units were the content of the August 24 report, which the government denied the next day. Company and government announcements establish that an agreement exists, not that it is economically sound, and brokerage target prices are opinions that reflect future orders, not confirmed profit.

Korea-US Tariff Deal on Korea Invest Insights

Korea's First US Investment Project and the Hormuz Deployment: The Announcement Becomes a Package, and the Alpha Stays in the Contracts

TL;DR

1. What Is Confirmed and What Is Not

2. Why the Announcement Becomes a Package

3. Where Nuclear Sits: Standalone No. 1 or Part of the Package

4. How Much Have the Stocks Already Priced In

5. The Alpha Is in the Contracts, Not the Equity

BHI: The Combined-Cycle Order Over the Gas Plant

Doosan Enerbility: Manufacturing and Service Revenue Over Full Construction Liability

Hyundai E&C: Guarantee Liability Comes Before Contract Value

6. Other Tracks: LNG, Shipbuilding, Semiconductors, and Steel

7. Events That Would Change the Judgment

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