[Click eStock] "CS Wind, Strong Orders in First Half... Full-Scale Rise Expected in Second Half"

Meritz Securities maintained a buy rating on CS Wind on the 11th, stating that a full-fledged upward trend is expected once the noise related to the US debt ceiling negotiations is resolved after the third quarter of this year and margin recovery is achieved. They also raised the target price from 89,000 KRW to 99,000 KRW.

CS Wind's consolidated operating profit for the first quarter of this year recorded 24.6 billion KRW, a 166.8% increase compared to the same period last year, surpassing the consensus estimate of 18.2 billion KRW. However, considering that the previously unreflected 17.1 billion KRW production tax credit (AMPC) profit was actually reflected, the performance is evaluated as somewhat disappointing.

It was explained that changes in the product mix and production disruptions at the US subsidiary due to a shortage of skilled labor were the main reasons for low profitability, continuing from the previous quarter. However, these issues have been easing since the second quarter of this year, and with the completion of the production stabilization program at the end of June, further improvements are expected after the third quarter.

Researcher Moon Kyung-won of Meritz Securities said, "Orders in the first quarter of this year reached 470 million USD, achieving 33% of the guidance, and orders in the second quarter are expected to be larger at 800 million USD," adding, "The expansion of orders from US-based GE was a major factor in the strong order performance in the first half."

It is understood that the upward trend in orders from turbine manufacturers is directly translating into CS Wind's order growth faster than expected. Researcher Moon said, "As turbine manufacturers indicate accelerating order growth toward the second half, CS Wind's US subsidiary will also enter continuous full operation after the second half," and added, "The current production capacity (CAPA) of CS Wind's US subsidiary is about 800 billion KRW, and with the completion of Phase 1 expansion from the second quarter of 2025, it is expected to increase to the low 1 trillion KRW range."