[Click eStock] "Sanil Electric, Anticipates US Power Distribution Transformer Demand... Analysis Initiated"

Yuanta Securities initiated coverage on Sanil Electric on the 26th, expecting increased demand for transmission and distribution transformers destined for the U.S., setting a target price of 73,000 KRW. The investment opinion is 'Buy.'

Researcher Son Hyun-jung explained, "Demand for transmission and distribution transformers is expected to structurally increase due to the second term of Trump's power infrastructure expansion policy," adding, "With the U.S. strengthening tariffs on China and Mexico, exports of domestically produced transformers are expected to expand."

He also noted, "About 50% of the company's current order backlog (390.5 billion KRW) consists of transmission and distribution transformers, and the recent pace of order growth is steep," highlighting, "In particular, sales of PAD transformers for the U.S. surged from 10.8 billion KRW in Q1 to 17.2 billion KRW in Q2 and 22.2 billion KRW in Q3 this year."

Furthermore, he stated, "By 2025, the sales proportion of transmission and distribution transformers is expected to surpass that of renewable energy special transformers," adding, "As major customers of transmission and distribution transformers such as PG&E, Duke Energy, and Southern continue to request increased volumes, there is also a high possibility of securing 3 to 4 additional new customers including Company D."

Along with this, it was assessed that transformer demand will continue to grow next year due to strengthened reshoring in the U.S. and competition in AI data centers.

Researcher Son said, "Since November, we have proactively responded to increasing demand by securing double the existing capacity (CAPA)," and added, "This expansion is expected to increase sales by more than 100 billion KRW annually."

He further projected, "Sales in 2024 are expected to increase by 49% year-on-year to 319.6 billion KRW, and operating profit is expected to rise by 119% to 102 billion KRW," adding, "Sales in 2025 are forecasted to grow by 38.4% year-on-year to 441.9 billion KRW, with operating profit increasing by 44.1% to 147 billion KRW."