Taihan Electric Wire May Pass U.S. Tariff Costs to Prices Amid Supply Shortage [Click e-Stock]

Steady Growth Expected for Taihan Electric Wire
Amid Ongoing Supply Shortages and Rising Demand in the U.S. Market

As supply shortages persist amid increasing demand in the U.S. wire and cable market, analysts predict that Taihan Electric Wire will continue to grow steadily. It is also expected that costs related to tariffs may eventually be passed on to product prices.

On August 1, NH Investment & Securities raised its target price for Taihan Electric Wire by 12.1% to 18,500 won and maintained its 'Buy' investment rating, citing these factors.

The upward revision of the target price was attributed to a decrease in the proportion of low-margin sales and the impact of tariffs that are likely to be reflected in product prices. This also reflects the reduction of the confirmed investment for the Dangjin Plant 2 in the second quarter from the previous 600 billion won to 500 billion won.

Increasing power demand and the trend toward decarbonization are driving active offshore wind power investments in Europe and East Asia, which was also cited as a positive factor. In South Korea, the inauguration of the Lee Jaemyung administration is expected to accelerate the construction of a U-shaped energy expressway and the development of large-scale offshore wind farms. Demand for high-voltage direct current (HVDC) submarine cables is expected to rise, and due to geographical characteristics, participation by overseas companies such as Nexans and Prysmian is considered difficult.

In the United States, the construction of 765kV power grids is also gaining momentum. As supply shortages continue amid rising demand in the wire and cable market, analysts believe that costs related to tariffs can ultimately be passed on to product prices.

The reduction in low-margin sales was also evaluated positively. In the second quarter of this year, Taihan Electric Wire posted consolidated sales of 916.4 billion won and operating profit of 28.6 billion won, with sales rising by 6.0% and operating profit falling by 23.5% compared to the same period last year. These figures are in line with market consensus. New orders in the second quarter amounted to approximately 530 billion won, and the order backlog stood at around 2.89 trillion won. The proportion of North American orders in the backlog is estimated to be around 25%.

Lee Minjae, an analyst at NH Investment & Securities, explained, "Growth is expected due to the construction of a U-shaped energy expressway and large-scale offshore wind farms in Korea, as well as expanded transmission and distribution investments overseas driven by increasing power demand."