LS Cable Asia Dominates Vietnam Business... Approaching the '1 Trillion Won Sales Club'

Entering Submarine Cable and Rare Earth Business
Company Name Changed to LS Eco Energy... Emphasizing Eco-Friendly Image

Expanding Business to ASEAN including Singapore and Malaysia
Establishing Second Growth Momentum

LS Cable Asia is expanding its local business in Vietnam into various fields such as submarine cables and rare earth elements. This move is interpreted as a strong commitment to actively respond to the growing electricity demand in Vietnam due to economic growth and industrial advancement, as well as the expanding trend of renewable energy adoption. Under the new name 'LS Eco Energy,' the company is diversifying its business portfolio and is expected to join the '1 trillion KRW sales club' next year.

LS Cable Asia recently added submarine cables and rare earth elements as new business objectives through a disclosure of a shareholders' meeting resolution. Along with entering new business areas, the company decided to change its name to LS Eco Energy. The company plans to hold an extraordinary shareholders' meeting on December 12 to approve the amendment to the articles of incorporation reflecting these changes.

LS Cable Asia Vietnam manufacturing subsidiary LSCV exterior.
[Photo by LS Cable Asia]

LS Cable Asia's plan is to expand its existing power and communication cable business to include submarine cables and rare earth elements, aiming to become an eco-friendly energy company. The company believes that leveraging its accumulated business experience and local networking know-how as Vietnam's top cable manufacturer will create synergies in the new business sectors as well.

LS Cable Asia entered the Vietnamese market in 1996 by establishing LS VINA in Haiphong. Later, in 2006, it established LSCV (LS Cable & System Vietnam Co) near Ho Chi Minh City, producing low, medium, high, and ultra-high voltage power cables, overhead wires, building wires, and copper materials. Currently, the company holds a 22% market share in Vietnam's power cable market.

Vietnam is the most important market for LS Cable Asia. Last year, 96% of the consolidated sales of 818.5 billion KRW came from local subsidiaries such as LS VINA and LSCV. It is fair to say that Vietnam's economic growth rate, urbanization rate, and power market growth directly impact LS Cable Asia's performance.

In the third quarter of this year, the expansion of high value-added ultra-high voltage cable exports to Europe by LS VINA was a major factor in improving performance. LS Cable Asia achieved an operating profit of 11.1 billion KRW in Q3, marking the first time since the company's establishment in 2015 that quarterly operating profit exceeded 10 billion KRW. The operating profit margin also reached a quarterly high of 6.6%. However, due to a domestic demand slump in Vietnam, sales recorded 167.5 billion KRW, a 13.8% decrease compared to 194.3 billion KRW in the same period last year.

An employee is manufacturing power cables at LS VINA, the Vietnamese subsidiary of LS Cable & System Asia.
[Photo by LS Cable & System Asia]

LS Cable Asia's business is evaluated to have entered a stable growth trajectory. Sales, which were 200.1 billion KRW in 2015, expanded to 818.5 billion KRW last year, recording a compound annual growth rate (CAGR) of 22.3%. The total order amount, which was around 565.7 billion KRW in 2016, has also continued to grow, achieving over 1 trillion KRW in orders for three consecutive years recently. The financial investment industry estimates that LS Cable Asia's consolidated sales this year will reach 706 billion KRW, operating profit 28 billion KRW, and net profit 5 billion KRW.

LS Cable Asia is expected to concretize new businesses aiming for 1 trillion KRW in sales next year and seek a new leap forward. Lee Sang-ho, CEO of LS Cable Asia, said at a press conference held at the Donghae plant in Gangwon Province last October, "By 2030, submarine cables will become the main source of sales for LS Cable Asia," adding, "Through new businesses, we will create a second growth momentum and contribute to the national policy of strengthening the rare earth supply chain."

Vietnam is promoting the construction of about 6GW of offshore wind farms by 2030, ranking among the top five in Asia after South Korea and Taiwan. Demand for connecting power grids among ASEAN countries is also increasing. PTSC, which signed a business agreement with LS Cable Asia, is promoting submarine cable construction between Vietnam and Singapore, suggesting that the business can expand to surrounding ASEAN countries.

The company is also accelerating its rare earth business. LS Cable Asia plans to supply rare earth oxides, such as neodymium refined overseas, to domestic and international general trading companies and permanent magnet manufacturers.

Kim Ji-san, a researcher at Kiwoom Securities, analyzed, "(LS Cable Asia) plans to enter the high value-added submarine cable market in partnership with Vietnam's state-owned oil and gas group," adding, "It is expected to explore new opportunities in the rare earth supply chain alliance between Korea and Vietnam."