[Click eStock] “LS, Strong Performance of Core Product Lines”

Strong Performance in Submarine Cable and Injection Molding Sectors Leads to Results
Kiwoom Securities Maintains LS Target Price at 95,000 Won

[Asia Economy Reporter Gong Byung-sun] LS is expected to post second-quarter earnings that exceed market consensus. This is attributed to the strong performance of its core product lines, including submarine cables and injection molding machines.

On the 14th, Kiwoom Securities estimated LS's second-quarter sales to increase by 30.7% year-on-year to KRW 3.2673 trillion, with operating profit rising 82% to KRW 171.9 billion. Both sales and operating profit surpass the consensus estimates of KRW 2.9657 trillion and KRW 150.6 billion, respectively. In particular, operating profit is expected to exceed consensus by approximately 12.4%.

The strong orders for submarine cables and the robust injection molding machine segment are anticipated to drive these results. LS affiliate LS Cable & System secured all supply rights for ultra-high voltage submarine cables for the first phase of Taiwan's offshore wind power project, scheduled through 2025. Additionally, orders for offshore wind power submarine cables, which were delayed due to COVID-19, are expected to resume. The injection molding machine segment handled by LS Mtron has successfully improved its product mix towards premium offerings, driven by increased demand for electronic products. Kim Ji-san, a researcher at Kiwoom Securities, predicted, “Amid a strong North American housing market, LS will target the North American market by strengthening its lineup of medium and large-sized products.”

In the second quarter, LS I&D is expected to maintain its profitability due to strong copper prices. Copper prices were around $7,600 per ton (approximately KRW 8.7 million) at the beginning of this year but rose to $10,724.50 on May 10. Consequently, LS I&D achieved a turnaround with an operating profit of KRW 37.7 billion in the first quarter. Increased investment in U.S. telecommunications infrastructure and growing demand for motor windings for global automobiles are also favorable factors for LS I&D. Researcher Kim explained, “LS I&D is focusing on expanding its performance in electric vehicle motor windings.”

Accordingly, Kiwoom Securities maintained its investment opinion of ‘Buy’ on LS with a target price of KRW 95,000. The closing price on the previous day was KRW 70,700.