[Click eStock] LS ELECTRIC, Will It Recover From Stock Price Decline?

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[Asia Economy Reporter Hwang Junho] Daishin Securities lowered the target price of LS ELECTRIC, whose stock price has fallen 13% over the past three months, to 70,000 KRW on the 13th.

Daishin Securities estimated LS ELECTRIC's Q4 sales last year at 725.4 billion KRW and operating profit at 51.3 billion KRW. Sales are 1% below consensus, while operating profit slightly exceeds consensus by about 1%. The sales figures reflect deferred domestic and overseas power equipment volumes, increased orders in power infrastructure such as batteries and communications, and increased investment in automation facilities. Operating profit considered the effect of fixed cost reduction due to sales increase and expansion of sales in the convergence sector.

However, the stock price has dropped 13% over the past three months. Major factors include deferred facility investments due to the COVID-19 Omicron variant, postponement of renewable energy legislation, and deferred performance across power equipment companies.

Researcher Dongheon Lee of Daishin Securities stated, "The target price was set by applying a target PER of 20 times to the average EPS of 3,508 KRW for 2021E and 22E," adding, "This year, ESS expansion is expected under the 9th Transmission and Distribution Plan, and with the expansion of renewable energy and facility investments, demand for power equipment is expected to increase."