[Click eStock] "LS Electric's Growth to Expand with US Data Center Orders"

Maintaining 'Buy' Rating and Target Price of 270,000 KRW

DS Investment & Securities maintained a 'Buy' rating and a target price of 270,000 KRW for LS ELECTRIC, forecasting an acceleration in growth following the acquisition of a US data center contract on the 19th.

LS ELECTRIC announced the previous day that it had signed a contract to supply switchboards and power equipment to a major US big tech data center. The contract is valued at 162.5 billion KRW, and combined with previously secured orders for the same project (approximately 90 billion KRW), the total reaches 250 billion KRW. Revenue is expected to be generated from the second to fourth quarters of this year.

Researchers An Juwon and Kim Jinhyung from DS Investment & Securities explained, "Since we are actively pursuing orders for power systems used in data centers for various companies, additional orders are expected to come in this year," adding, "Starting with the recent announcement, we will demonstrate tangible results in the data center sector."

Growth is also anticipated in the ultra-high voltage transformer segment. LS ELECTRIC is collaborating with global energy company GE Vernova to pursue ultra-high voltage transformer orders in Europe and Southeast Asia. To expand production capacity, the company announced an expansion of production facilities at its Busan plant last year and increased its annual production capacity from around 200 billion KRW to 800 billion KRW through the acquisition of KOC (a transformer manufacturer). Researcher An noted, "With the ongoing shortage of ultra-high voltage transformer supply, LS ELECTRIC is enhancing its competitiveness through CAPA expansion," and analyzed, "The company is expected to stand out in the global market this year."

This year's performance is projected at sales of 5.1 trillion KRW (an 11.6% increase year-on-year) and operating profit of 467.4 billion KRW (a 19.9% increase). Researcher An stated, "The results from switchboards and ultra-high voltage transformers will be reflected, sustaining solid growth in the power infrastructure sector," and forecasted, "Especially from the second quarter, as US order sales are reflected, growth will accelerate, and once the CAPA expansion is completed in the second half, sales and profits will level up further."

Recently, LS ELECTRIC's stock price has fallen 29% from last month's peak. Regarding this, Researcher An assessed, "Although the AI momentum weakened and the stock underwent a correction, this data center contract will serve as a catalyst for a rebound."