[Click eStock] "LS, Booming Outlook Supported by US Power Demand... Target Price Up"

On the 17th, Korea Investment & Securities evaluated LS as an attractive repurchase price based on the long-term boom outlook for electric wires and medium-sized electrical equipment. The target price was raised from the previous 160,000 KRW to 180,000 KRW, and the investment opinion was maintained as 'Buy.'

Researcher Choi Moon-seon stated, "The third-quarter sales are expected to be 7.036 trillion KRW, a 17% increase compared to the previous year, and operating profit is expected to be 246.3 billion KRW, an 8.9% increase," adding, "This is similar to the existing estimate of 248 billion KRW and also aligns with the consensus of 259 billion KRW."

Researcher Choi explained, "The electric wire and medium-sized electrical equipment sectors are expected to perform worse than our forecast because the third quarter is an off-season, there is a backlash from shipments concentrated in the second quarter, and manufacturing activity is sluggish."

He continued, "However, the reason we expect operating profit similar to our previous estimate is that LS MnM is expected to have favorable operating profit due to the strong prices of gold and silver," and noted, "In the end, the rise in precious metal prices offset the weakness in the core businesses of electric wires and medium-sized electrical equipment."

Meanwhile, considering the current demand for electric wires and medium-sized electrical equipment in the United States, the performance slump in these sectors in the third quarter is diagnosed as temporary.

Researcher Choi said, "The increase in manufacturing construction investment in the U.S. shows no signs of stopping, and manufacturing plants in the U.S. are bound to increase," forecasting, "This leads to increased power demand, and due to automation, even factories of the same size use more electricity than in the past."

He added, "This is the key reason why we believe electric wires and medium-sized electrical equipment have entered a long-term boom," and further stated, "Even if the third quarter, which is originally an off-season, shows a deeper slump due to the surge in orders in the second quarter, we judge it to be temporary."