[Click eStock] "LS Electric Expands Transformer Production Capacity... Target Price Raised"

Responding to Cost Increases through Rapid Supply Capacity Expansion
Position Strengthened by Acquisition of New Companies

Hana Securities analyzed on the 24th that LS Electric is quickly responding to demand by expanding its transformer production capacity. They maintained a 'Buy' investment rating and raised the target price by 25% to 250,000 KRW.

Researchers Jaeseon Yoo and Unsaem Chae from Hana Securities stated, "This target price increase is based on the projected 2025 earnings per share (EPS)," adding, "The continuous strength in the distribution market and the expansion of production capacity in the transmission market are the main factors." They also noted, "Despite recent raw material price increases, LS Electric is expected to appropriately pass on the cost increases to product prices through its short lead-time production capacity (Capa)."

LS Electric plans to invest 80.3 billion KRW at its Busan plant to double its ultra-high voltage transformer production capacity to an annual scale of 400 billion KRW. The project is underway with a target completion date of September 2025. This investment is a strategic decision to meet customer demand with fast delivery by utilizing the insufficient production capacity in the global transformer market.

Additionally, LS Electric expanded its business to include not only ultra-high voltage transformers but also special transformers for ships by acquiring a 51% stake in KOC Electric. As of 2023, KOC Electric's sales amounted to 93.5 billion KRW, operating profit was 8.1 billion KRW, and net profit was 5.9 billion KRW. This acquisition has strengthened LS Electric's transformer portfolio.

Researchers Jaeseon Yoo and Unsaem Chae said, "These strategic investments and acquisitions are expected to effectively respond to the increasing demand for ultra-high voltage transmission facilities in the North American region and further strengthen the company's market position through the acquisition of new firms," adding, "They are anticipated to play a crucial role in accelerating LS Electric's future sales growth."