Rising as a Beneficiary Stock of Electric Vehicles... Electric Wires and Power Equipment Also Shine

[Asia Economy Reporter Kwon Jaehee] As the global transition to eco-friendly energy accelerates, electric vehicles (EVs) are rapidly spreading, highlighting the wire and power equipment sectors as beneficiaries of the EV boom. While EV-related stocks had previously been limited to core components such as batteries and battery materials, the expansion of EVs has increased demand for infrastructure installation, broadening the market base.

According to the Korea Exchange on the 9th, as of 9:11 a.m., LS ELECTRIC was trading at 53,800 KRW, up 0.19% from the previous trading day. LS ELECTRIC is a manufacturer of ultra-high voltage power lines and is considered one of the industry's big three alongside LS Cable & System and Daehan Electric Wire. After hitting a low of 40,000 KRW on February 22, LS ELECTRIC successfully rebounded and has been on a steady upward trend. Its stock price has risen approximately 34.50% from the low point. At the same time, Daehan Electric Wire was trading at 2,130 KRW, up 0.24% from the previous day. Daehan Electric Wire hit a low of 1,340 KRW on March 28 and has since increased by nearly 59%. LS Cable & System was down 1.46% from the previous day at 67,700 KRW but has risen about 43.28% from its low of 47,250 KRW on February 24.

The steady rise in stock prices of these big three companies is attributed to their recognition as beneficiaries of the EV market. As EV sales expand globally, related infrastructure installations have become active, benefiting companies producing ultra-high voltage power. According to the International Energy Agency (IEA) report "Global EV Market Trends 2021," global EV sales reached 6.6 million units last year, more than tripling compared to 2019. The industry expects sales to reach 32 million units by around 2030.

In fact, the order backlogs of the big three companies have been steadily increasing. As of the end of the first quarter of this year, their order backlogs totaled 4.9286 trillion KRW, a 17% increase compared to the end of last year. The big three companies have seen a steady rise in order backlogs since hitting a low of 3.2492 trillion KRW in 2018, surpassing 4 trillion KRW at the end of last year and continuing to grow this year.

Along with the expansion of EVs, the growth of renewable energy generation is also cited as a factor driving stock prices. Choi Moonseon, a researcher at Korea Investment & Securities, analyzed, "With the spread of EVs and the expansion of renewable energy generation, investments in transmission and distribution networks will increase worldwide," adding, "Due to the expansion of transmission and distribution network investments, the sector is expected to enter a mid- to long-term upward cycle."