[Click eStock] "LS Jeonseon Asia to Achieve Record High Performance This Year... Target Price Maintained"

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] Kiwoom Securities announced on the 29th that it maintains a buy rating and a target price of 12,000 KRW for LS Cable Asia. This is based on the expectation that the company will achieve its best-ever performance this year, supported by business base expansion and a favorable investment environment.

Kiwoom Securities forecasted that LS Cable Asia's consolidated sales for this year will increase by 12% year-on-year to 835.4 billion KRW, and operating profit will rise by 14% to 32.2 billion KRW, setting a new record high. The strong performance is attributed to the rise in the KRW-USD exchange rate, improved product mix, overcoming the impact of COVID-19 in Vietnam, and favorable copper prices. The annual performance trend is expected to rise from the first quarter low.

The operating profit estimate for the second quarter was presented as 8.2 billion KRW, a 6% decrease compared to the same period last year. This figure aligns with the market consensus of 8.3 billion KRW. The distribution sector of LS-VINA, the local production subsidiary in Vietnam, is expected to deliver solid results due to seasonality and an increase in order backlog. In particular, orders for high value-added domestic projects in Vietnam have increased.

The ultra-high voltage sector is also seeing an increase in order backlog, leading to expectations of solid performance through the second half of the year. The UTP communication cables of the subsidiary LSCV completed capacity expansion in March, securing a foundation for additional growth. Demand for high value-added products for North America is increasing, which is expected to improve profitability. Busduct demand is also rising for data centers.

Kiwoom Securities projected that LS Cable Asia's UTP sales will increase by more than 15% this year. LS Cable Asia recently announced plans to increase trade with the United States, a major export market, following the expansion of LSCV's UTP communication cable production facilities. Additionally, it is expected to expand its customer base by signing a supply contract for optical cables with Viettel, Vietnam's largest mobile telecommunications operator.

Researcher Jisan Kim of Kiwoom Securities analyzed, "LS-VINA is focusing on securing orders for large Korean power plant projects and renewable energy projects in Vietnam and ASEAN countries." He added, "As renewable energy investments and power grid undergrounding projects expand in Vietnam, LS Cable Asia, which holds the number one market share in Vietnam's power and communication cable market, will continue to benefit."