Aecon Joint Venture Gets C$350M Contract to Replace Steam Generators

Aecon Group Inc. (ARE) has announced that the Steam Generator Replacement Team (SGRT), a 50/50 joint venture between Aecon and SGT (a partnership between Framatome and United Engineers & Constructors), was awarded a contract of approximately C$350 million from Bruce Power.

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Under the contract, the steam generators at Units 3 and 4 of the Bruce Nuclear Generating Station in Tiverton, Ontario, will be replaced. Aecon’s portion of the contract was added to its Construction backlog in the second quarter of 2021.

Aecon’s President and CEO said, “This contract award builds on the successful work by SGRT at Unit 6 and further demonstrates Aecon’s diverse, industry-leading expertise as the largest nuclear constructor in Canada. The Bruce MCR Project is creating jobs, generating economic development opportunities in local and surrounding communities, and will be integral in advancing Ontario’s economic recovery coming out of the COVID-19 pandemic. We look forward to working with Bruce Power and our joint venture partner to execute this project which is critical in supplying clean, reliable, and low-cost energy to Ontarians.”

SGRT is currently carrying out work to replace the steam generators on Unit 6, with the majority of the work to be completed by the end of 2021.

Mike Rencheck, President and CEO of Bruce Power, said that while they continue to focus on Unit 6, which remains on track, it is important to continue planning for future Major Component Replacement (RCM) projects, which will play a key role in boosting the economy as Ontario enters a recovery phase from the COVID-19 pandemic. He added that Securing the long-term future of the Bruce site is essential to ensure Canada meets its commitments to achieve net-zero emissions by 2050. (See Aecon Group Inc. stock chart on TipRanks)

Two months ago, Canaccord Genuity analyst Yuri Lynk maintained a Buy rating on the stock and a C$23.00 price target, following the financial close of the C$729.2 million Tunnel project. This implies 24% upside potential.

Overall, consensus among analysts is that ARE is a Moderate Buy based on 5 Buys and 2 Holds. The average Aecon Group price target of C$21.33 implies 16.8% upside potential to current levels. Shares have gained more than 10% year-to-date.