[Click eStock] "LS, Undersea Cable and Copper Prices Likely to Drive Value Increase"

Hi Investment & Securities, Investment Opinion 'Buy' and Target Price 84,000 Won Presented... Closing Price on 27th 61,100 Won

[Asia Economy Reporter Kum Boryeong] An analysis has emerged that the price of submarine cables and copper is expected to drive the valuation increase of LS.

On the 30th, Hi Investment & Securities gave LS a 'Buy' rating with a target price of 84,000 KRW, up from the previous 71,000 KRW. The closing price on the 27th was 61,100 KRW.

The development of offshore wind power complexes is driving growth in the submarine cable market, and LS Cable & System is expected to benefit. Recently, the construction of offshore wind farms has been increasing mainly in Europe, the Middle East, and Asian countries as renewable energy expands. Along with this, demand for submarine cables is also rising because submarine cables are essential to transmit electricity generated at offshore wind power plants to the land.

Lee Sangheon, a researcher at Hi Investment & Securities, explained, "LS Cable & System is the only company producing ultra-high voltage submarine cables domestically, and globally, there are only five companies in Europe and Japan. Last year, LS Cable & System secured orders worth 500 billion KRW in Taiwan alone related to submarine cables, and this year, it has newly received orders worth 300 billion KRW from the US, the Netherlands, Bahrain, and other regions. Most importantly, Denmark's Orsted, the world's number one offshore wind company, is promoting the construction of the largest offshore wind farm in the Asia-Pacific region off the coast of Incheon, and LS Cable & System has signed a five-year priority supply contract for ultra-high voltage submarine cables with Orsted." Due to this increase in orders, LS Cable & System's order backlog grew from 1.9 trillion KRW at the end of last year to 2.08 trillion KRW by the end of the third quarter this year.

The rise in copper prices is also impacting LS's performance turnaround. Most of LS's subsidiaries' performances have a high correlation with copper prices due to their business structures. The researcher said, "Copper prices hit a yearly low of 4,625 USD per ton on March 23, when fears over COVID-19 peaked, and have been rising since then. Especially since mid-November, prices have surpassed 7,000 USD per ton and maintained an upward trend. Going forward, as global economic recovery progresses with expanded investment in eco-friendly infrastructure, copper demand is expected to increase further, so the upward trend in copper prices is likely to continue. This rise in copper prices will provide a catalyst for LS's performance turnaround."