[Click eStock] "Korea Electric Terminal, Biggest Beneficiary of Electric Vehicle Transition"

On May 29, SK Securities projected that Korea Electric Terminal, a manufacturer of automotive connectors, will continue to grow steadily as the automotive industry shifts toward electrification and electric vehicles. The firm maintained a "Buy" investment rating and set a target price of 90,000 won.

Yoon Hyukjin, a researcher at SK Securities, stated, "The connector market is expanding more than tenfold with the transition to electric vehicles," adding, "As both the unit price and demand for connectors required in electric vehicles have increased significantly compared to internal combustion engine vehicles, Korea Electric Terminal is emerging as the biggest beneficiary of automotive electrification and the shift to electric vehicles." The target price of 90,000 won he suggested represents a 53.8% upside from the current share price (closing price on the 28th: 58,500 won).

Korea Electric Terminal is a key supplier to Hyundai Motor Group and is diversifying its customer base to global automakers such as GM, Stellantis, and Tesla. Electric vehicles require high-voltage cables in battery systems, and as a result, high-voltage connectors that are more than ten times more expensive than those used in internal combustion engine vehicles are necessary.

Researcher Yoon analyzed, "The price of automotive connectors is generally low because it is a mature industry, with general connectors accounting for only about 100,000 to 200,000 won per vehicle, which are small components in vehicles costing tens of millions of won." He added, "As connectors for electric vehicles have evolved from simple connectors to board-type connectors, the demand per electric vehicle now exceeds 1,000,000 won."

Additionally, he noted that most models using the BEV3 electric passenger car platform from GM, one of Korea Electric Terminal's overseas clients, are produced in the United States, so U.S. tariff policies are expected to have little impact.

Yoon further analyzed, "As sales of BEV3 platform models by North American clients increase, annual revenue at KET USA, the North American subsidiary, through the Mexico plant, is expected to expand to as much as 500 billion won in the long term."

Korea Electric Terminal is also strengthening its shareholder return policy. From 2024 to 2026, the company plans to use 30% of its consolidated net profit for shareholder returns, and the dividend for 2024 was significantly raised to 2,200 won. In March of this year, the company purchased 20 billion won worth of treasury shares, and in April, it decided to cancel some of its treasury shares.

Researcher Yoon Hyukjin stated, "Although concerns about U.S. tariffs are weighing on the entire automotive sector, Korea Electric Terminal has long-term growth potential as the demand market is growing tenfold due to the themes of electrification and the transition to electric vehicles."