[Click eStock] "LS Eco Energy, Simultaneous Expectations for Revenue Growth and Profitability Improvement"

On the 26th, Korea Investment & Securities stated that LS Eco Energy is expected to experience both top-line growth and profitability improvement simultaneously.

LS Eco Energy is the leading power cable manufacturer in Vietnam. It produces and sells medium-low voltage and ultra-high voltage power lines, communication lines, and bus ducts. The Vietnamese power market is primarily operated around the Vietnam Electricity (EVN), which is responsible for over 60% of power generation, while transmission and sales are handled by EVN and its affiliated state-owned enterprises. Major subsidiaries LS Vina and LSCV hold advantages in technology and sales scale compared to local competitors and have numerous contract references with Vietnam Electricity.

Vietnam’s power generation has increased proportionally with industrialization and urbanization. The Vietnamese government has set an urbanization rate target of 50% by 2030, and to achieve this goal, power generation is expected to increase by 1.8 times compared to 2023, with an average annual growth rate of 7.5%. Looking at cases from major countries, power generation doubled on average during the process of reaching a 50% urbanization rate. Although the growth rate of Vietnam’s power generation slowed somewhat after COVID-19, it recovered to double-digit growth compared to the previous year as of August 2024 cumulative data. Vietnam’s GDP growth rate is also expected to maintain high growth above 6%, suggesting that the power generation growth rate will remain at a high level. Since the Vietnamese government plans to expand power generation capacity to 151GW by 2030, approximately double that of 2022, demand for power cables is expected to structurally increase.

Following the 8th Power Development Plan, the growth of the Vietnamese power market is expected to accelerate the pace of transmission network construction. Future installed capacity will be concentrated in the southern and northern regions, requiring long-distance transmission, and recently, restrictions on hydropower generation in the northern region have increased the need to transmit power generated in the south to the north. LS Eco Energy is the only local Vietnamese company capable of supplying underground ultra-high voltage power lines, which is expected to give it an advantage in future contracts. Researchers Kim Jeongchan and Choi Moonseon from Korea Investment & Securities said, "There is also a trend of improving profitability as the export ratio of high-margin products increases recently," adding, "It is encouraging that exports of ultra-high voltage power lines to Europe and UTP cables to North America are expanding based on cost competitiveness from production in Vietnam."