HD Hyundai Electric and Jeryong Electric Continue Performance Improvement
Increased Demand for Transformers Due to AI Adoption Expansion
Responding to Growing Orders with Expansion Investment
Shares of power equipment manufacturers such as Jeryong Electric and Hyosung Heavy Industries surged. This is due to forecasts that power consumption will sharply increase as investments in artificial intelligence (AI) continue. The surge in power equipment-related stocks in the Taiwanese stock market, which is benefiting from AI investments, also appears to have had an impact.
According to the financial investment industry on the 5th, HD Hyundai Electric's stock price has risen 60% since the beginning of this year. HD Hyundai Electric achieved results exceeding market expectations in the fourth quarter of last year. In the fourth quarter, it recorded sales of 797.3 billion KRW and an operating profit of 124.7 billion KRW, representing increases of 18% and 144% respectively compared to the same period last year. The market expectation for operating profit was 98.2 billion KRW.
Lee Min-jae, a researcher at NH Investment & Securities, analyzed, "Along with increased demand for power equipment in the North American region, discussions are underway for volumes through 2028 due to expansions of petrochemical plants in the Middle East and increased renewable energy investments in Europe," adding, "Not only HD Hyundai Electric but also domestic and international power equipment companies are experiencing both top-line growth and profit improvements."
In the KOSDAQ market, Jeryong Electric's stock price also rose 35.7% since the beginning of this year. While the KOSDAQ index remained flat, the significant rise in Jeryong Electric's stock price is attributed to expectations of improved performance due to increased transformer demand in the North American region. Jeryong Electric recorded sales of 183.9 billion KRW and an operating profit of 70.2 billion KRW last year. Compared to the previous year, sales and operating profit increased by 114% and 363%, respectively. The company explained that exports increased as it targeted the North American market amid rising power demand and aging power grids.
Hyosung Heavy Industries, which rose 37% this year, also saw its operating profit increase by 80% compared to the previous year. Profits increased as sales grew in overseas markets such as North America, Europe, and the Middle East due to the global boom in power equipment.
As expectations that the trend of improved performance for power equipment companies will continue gain strength, stock prices are rapidly rising. Ham Hyung-do, a researcher at Shinhan Investment Corp., explained, "In addition to demand to replace aging power grids in the United States, the global expansion of renewable energy shares and electrification trends driven by electric vehicles and AI are leading to increased demand for power grid expansion and reinforcement."
Seong Jong-hwa, a researcher at Ebest Investment & Securities, also analyzed, "The power equipment industry is expected to experience a super boom for a considerable period centered on major regional markets such as North America, Europe, and the Middle East," adding, "Large-scale orders focused on ultra-high voltage continue in the Middle East market, including Neom City."
In the Taiwanese stock market, which has been hitting new highs since last year, shares of power equipment companies continue to rise. Taiwan Hua Cheng Electric, which produces transformers and power infrastructure-related equipment, saw its stock price increase elevenfold compared to early last year. Choi Seol-hwa, a researcher at Meritz Securities, explained, "The sector with the highest increase in the Taiwanese stock market is power equipment," adding, "This is due to the surge in power demand from increased AI industry semiconductor production and improved overseas performance."
According to the International Energy Agency (IEA), global data center power consumption is expected to increase from 460 TWh (terawatt-hours) in 2022 to up to 1,050 TWh by 2026. As AI adoption causes a sharp rise in power consumption, demand for power equipment is also likely to increase rapidly. Iljin Electric, which produces transformers and circuit breakers, is accelerating expansion investments. Iljin Electric is negotiating contracts with customers for deliveries in 2027, as production capacity is unable to keep up with order volumes. Recently, it secured 100 billion KRW in expansion funds through a rights offering.
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