[Click eStock] "LS Eco Energy, Expected Beneficiary of Rare Earths... Coverage Initiated"

On the 18th, Kiwoom Securities announced the initiation of coverage on LS Eco Energy with a 'Buy' investment rating and a target price of 23,000 KRW.

Kim Sowon, a researcher at Kiwoom Securities, stated in the report, "Operating profit in 2024 is expected to be 33.4 billion KRW, focusing on improving profitability through a product mix centered on extra-high voltage cables," and analyzed, "The company’s corporate value is expected to be re-evaluated over several years as the core business improves through the expansion of high value-added products, along with momentum from new businesses such as submarine cables and rare earths."

LS Eco Energy is the leading power cable company in Vietnam. It produces extra-high voltage and medium-to-low voltage power lines, communication lines, and basic materials for electric wires. Researcher Kim explained, "The business structure, which was centered on medium-to-low voltage power lines, will expand to high value-added products including extra-high voltage power lines, driven by the growth of the power market following the Vietnamese government’s power development plans," adding, "The company has also secured mid- to long-term growth drivers through the promotion of the submarine cable new business."

Kim further noted, "This month, the company signed two extra-high voltage cable supply contracts in Denmark, rapidly expanding its footprint in Europe," and said, "Going forward, it plans to actively respond to expanding orders in Asia and Europe based on collaboration among affiliates."

Rare earths are key minerals used in electric vehicles, batteries, and wind turbines. Last year, the Korean government announced cooperation with Vietnam, which has the world’s second-largest rare earth reserves. LS Eco Energy started the rare earth oxide business domestically for the first time and secured the rare earth supply chain by signing a long-term supply contract with a Vietnamese mining company. The supply volume is planned to expand from 200 tons this year to over 500 tons starting next year.

Researcher Kim projected, "Since the Chinese government controls all technology and personnel outflow related to rare earths, the company’s mid- to long-term benefits from rapidly advancing the rare earth oxide business as the first in Korea will continue," and anticipated, "The rare earth oxide business, being a high value-added sector, is expected to lead both quantitative and qualitative growth for the company."