CS Wind, Stock Price Cheers on Profitability Improvement

Operating Profit of 130.3 Billion KRW in Q2... 225% Increase Compared to Market Expectations
Profitability Improved Due to Price Increase of Subsidiary CS Wind Offshore

The stock price of CS Wind has rebounded sharply since the beginning of this month. This is due to the confirmation of improved profitability through the second-quarter earnings, as well as positive effects from improved investor sentiment amid expectations of a U.S. interest rate cut.

According to the financial investment industry on the 13th, CS Wind's stock price rose 37.3% this month. Considering that the KOSPI fell 5.5% during the same period, the market-relative return amounts to 42.8 percentage points.

CS Wind is a company that manufactures wind towers and related components. It operates tower production subsidiaries in Vietnam, the United States, Portugal, China, Turkey, Taiwan, and Malaysia. To strengthen its market competitiveness with offshore wind power as its core, it acquired the European offshore wind substructure manufacturer Bladt Industries and changed its corporate name to CS Wind Offshore (CSWO). It supplies substructures to global markets including Europe and the U.S.

In the second quarter of this year, CS Wind recorded consolidated sales of 857.8 billion KRW and operating profit of 130.3 billion KRW, representing increases of 106% and 212% respectively compared to the same period last year. The operating profit exceeded market expectations of 40.1 billion KRW by 224.9%. In the second quarter, CSWO posted sales of 337.3 billion KRW and operating profit of 80.1 billion KRW.

Market experts who reviewed the second-quarter results have optimistic forecasts for CS Wind. Samsung Securities analyst Heo Jae-jun explained, "After recording an operating loss of 52.7 billion KRW in the first quarter, CSWO negotiated with clients on price increases for offshore substations (OSS) and the reversal of construction loss provisions," adding, "Thanks to positive negotiation outcomes, it turned profitable." He continued, "Negotiations on price increases for offshore wind turbine substructures are also underway," and "The OSS business will be scaled down from the second half of this year, while the substructure business will increase its share."

Kyobo Securities analyst Park Geon-young analyzed, "Although the wind power industry has not fully recovered considering the status of upstream companies, CS Wind's profitability is improving." He added, "If the industry recovers, CS Wind will quickly recognize existing orders as earnings," emphasizing, "This is a factor that justifies upward revisions of earnings estimates."

Improved investor sentiment due to interest rate cuts is also continuing. Eugene Investment & Securities analyst Han Byung-hwa said, "The arrival of profit normalization at the early stage of the interest rate decline is also a positive factor," explaining, "For wind power companies, resolving the high interest rate issue is more important than the U.S. presidential election results." He added, "CS Wind secured higher external growth compared to competitors through large-scale mergers and acquisitions," and "The acquired company, which had been operating at a loss, successfully transitioned to structural profitability, entering a phase where profit growth accelerates."