[Click e-Stock] "Hyosung Heavy Industries Expected to Deliver Strong Results Through 2030"

Target Price Raised from 630,000 Won to 860,000 Won

On June 10, IBK Investment & Securities raised its target price for Hyosung Heavy Industries from 6.3 million won to 8.6 million won, citing expectations of significant earnings growth in the second quarter and continued strong order momentum driven by expanding power infrastructure investments, particularly in the Americas. The firm maintained its "Buy" investment rating.

Hyosung Heavy Industries' consolidated sales and operating profit for the second quarter are projected at 1.297 trillion won (up 8.6% year-on-year) and 120.6 billion won (up 92.5% year-on-year), respectively. Kim Taehyun, an analyst at IBK Investment & Securities, stated, "The profit growth is expected to stand out as the proportion of sales from high-margin regions such as the United States and India increases." He added, "As of the first quarter, the operating margin for the US and Indian subsidiaries was 29% and 25%, respectively, and a similar level is expected in the second quarter."

Currently, Hyosung Heavy Industries is reflecting order volumes from the second half of 2023 in its sales and has already secured supply contracts through 2028. In particular, orders for ultra-high voltage circuit breakers are ramping up in the US, which is viewed positively in terms of portfolio diversification. Kim noted, "It is estimated that about 30-40% of new orders are for ultra-high voltage circuit breakers, and sales activities targeting existing ultra-high voltage transformer clients are being strengthened." He added, "Although there are no local production facilities yet, the company is maintaining high profit margins comparable to those of ultra-high voltage transformers, thanks to significant entry barriers."

The company is also expected to strengthen its order competitiveness through aggressive plant expansions. Kim said, "Following the expansion of the Changwon plant (with sales of about 100 billion won) and the US plant (with sales of about 200 million dollars), additional expansion investments are under review." He continued, "As seen in recent power equipment orders for xAI, the company's market responsiveness?covering not only power grid replacement but also data center demand?is expected to be further enhanced through aggressive capacity expansion."