[Click eStock] "LS ELECTRIC, Meaningful Turnaround Expected in 2Q"

[Asia Economy Reporter Song Hwajeong] Daishin Securities maintained its 'Buy' rating and target price of 69,000 KRW for LS ELECTRIC on the 20th, expecting a meaningful turnaround in the company's performance in the second quarter of this year.

Daishin Securities forecasted that LS ELECTRIC's second-quarter sales would increase by 5% year-on-year to 629.3 billion KRW, and operating profit would rise by 20% to 46.5 billion KRW, surpassing market consensus estimates based on operating profit. Lee Dongheon, a researcher at Daishin Securities, explained, "The power equipment sector is recovering from the impact of COVID-19, with sales continuing to improve following the first quarter, and the power infrastructure segment is expected to turn around due to a low base in the first quarter." He added, "Although performance fell short of expectations due to COVID-19 impacts last year and in the first quarter of this year, a meaningful recovery is anticipated in the second quarter." The outlook is that demand for power equipment will continue to recover in the second half of this year and next year.

The increase in summer power demand is also reflected in the stock price. LS ELECTRIC recently regained the 60,000 KRW level after about four months. Lee said, "Among LS ELECTRIC's historical average monthly returns, July has been the highest," and analyzed, "This is likely due to the seasonal peak in the second quarter and expectations for facility investments driven by summer power peaks." He also noted, "Domestic facility investments and automobile investments are expected to increase, and there is a possibility of securing orders for hydrogen power plants in the second half of the year." He added, "With the expansion of renewable energy investments, demand for distributed power equipment is growing, and LS ELECTRIC has established a dominant position in low-voltage power equipment."

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