KB Securities reported that LS Electric is expanding its new orders for North American big tech and data centers. As a result, the firm raised its target price from 260,000 won to 280,000 won while maintaining a 'buy' rating.
Jung Hye-jung, a researcher at KB Securities, noted, "In the second quarter, orders from North American big tech and data centers have continued across various product lines, from distribution equipment to high-voltage transformers. The orders secured in the first half for domestic and international data center distribution panels and equipment are being reflected in sales."
KB Securities forecasts LS Electric's second-quarter revenue to reach 1.3 trillion won, an 11.9% increase from the same period last year, with operating profit expected to rise 44.5% to 156.9 billion won. The operating profit aligns with market expectations.
Jung added, "The effects of the expanded production capacity for high-voltage transformers completed at the end of last year are also contributing. The proportion of high-margin products is increasing, leading to an operating profit margin of 11.8%, up 2.7 percentage points from the previous year."
The company is also experiencing smooth progress in new orders. Jung stated, "The major contracts disclosed in the second quarter alone, including distribution equipment, distribution panels, medium and low-voltage transformers, and high-voltage transformers for North American big tech and data centers, amount to approximately 800 billion won. Considering smaller contracts not subject to disclosure, the total new orders for the second quarter are expected to exceed 2 trillion won."
She further noted, "The annual new order guidance is likely to be raised from the previous 4.1 trillion won, as orders for North American big tech are likely to lead to repeat contracts, strengthening the foundation for long-term growth."
* This article has been translated by AI.
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