[Click e-Stock] "LS Electric Accelerates Growth Drive... Target Price Raised"

On January 14, Kiwoom Securities raised its target price for LS Electric to 620,000 won, citing better-than-expected order performance. The buy investment rating was maintained.

LS Electric presented a new order guidance of 2.9 trillion won for 2025. As of the third quarter of this year, cumulative new orders amounted to approximately 2.1 trillion won. With over 1 trillion won in new orders secured in the fourth quarter alone, the company is expected to exceed its annual order guidance.

Han-Gyeol Lee, an analyst at Kiwoom Securities, explained, "Overall demand for electrical equipment remains solid, and order growth is particularly evident in North America, which is a key region for growth." He added, "It is especially positive that orders for data center power distribution panels and ultra-high voltage transformers are both increasing simultaneously."

He continued, "From a mid- to long-term perspective, the market share of data center power distribution panels is expected to rise, driven by diversification of clients. The supply-demand imbalance for ultra-high voltage transformers has yet to be resolved, so orders for transformer products are also expected to continue their solid growth. In addition, as energy storage systems (ESS) are increasingly used as backup power sources for data centers, orders for ESS-related components are also projected to gradually increase."

LS Electric's fourth-quarter sales are expected to reach 1.4433 trillion won, up 6.2% year-on-year, while operating profit for the same period is projected to decline by 10.7% to 107.1 billion won, slightly below market expectations.

Lee noted, "Following the previous quarter, strong sales in the power business division, including ultra-high voltage transformers and power distribution panels, especially in North America, are expected to drive performance improvement. However, the extent of profitability improvement is likely to be limited due to tariff burdens and one-off costs from restructuring the Chinese subsidiary."

LS Electric's sales in 2026 are forecast to reach 6.0327 trillion won, with operating profit at 638.4 billion won. These figures represent increases of 23.5% and 58.1%, respectively, compared to last year.

Lee stated, "Significant performance growth is expected this year, reflecting the expansion of ultra-high voltage transformer capacity in Busan and strong new orders for 2025. The second Busan plant is anticipated to achieve rapid production stabilization, with an operating rate of around 90% from this year, thanks to proactive recruitment of skilled workers."

He further analyzed, "Starting this year, the company plans to invest about 100 billion won annually over the next three years to establish power distribution panel production lines in the United States. The increase in demand for power distribution panels and ultra-high voltage transformers, driven by large-scale data center investments in the North American market, is expected to fuel mid- to long-term growth in the power business division."