Meritz Securities stated on September 14 that LS Marine Solutions is expected to benefit from a shortage of cable laying vessels (CLVs) due to the expansion of undersea power networks. The firm maintained a 'Buy' rating and set a target price of 40,000 won. The stock closed at 32,300 won on September 11, indicating a potential upside of 23.8%.
Jang Jae-hyuk, a researcher at Meritz Securities, explained, "While LS Marine Solutions is known as a player in the offshore wind sector, its core business involves owning and operating cable laying vessels, which are critical assets for the expansion of undersea power networks." He noted that as the depth and length of undersea cable installations increase, the number of days required for vessel deployment also rises.
Demand for undersea cables is expected to grow, but the supply of laying vessels is projected to remain limited. Excluding China, the demand for undersea cables for offshore wind in Asia and Europe is expected to increase from 2,208 kilometers last year to approximately 6,645 kilometers by 2030, nearly tripling. During the same period, demand for European interconnector cables is anticipated to rise from about 1,500 kilometers to 7,000 kilometers, a 4.7-fold increase. In contrast, the global supply of power cable laying vessels is expected to grow only from around 100 to about 115 by 2030, a mere 15% increase.
LS Marine Solutions plans to introduce a new 18,000 GT CLV, investing approximately 350 billion won, by 2028 to enhance its capabilities for long-distance interconnector construction. Jang emphasized that significant investment, lengthy construction periods, and stable cable production and order capabilities are essential, adding that the connection with its parent company, LS Cable, is a competitive advantage.
He also projected that the West Coast Power Highway will drive future earnings growth. Meritz Securities estimates that LS Marine Solutions will generate over 500 billion won in construction revenue from the first phase of the project. Assuming an operating profit margin of 20%, the total operating profit for the project is estimated to exceed 100 billion won.
Jang noted, "Operating profit is expected to increase from about 7 billion won last year to around 12 billion won this year, and as revenue recognition from the Sinan-Wooey offshore wind project begins in earnest in 2027, it is projected to approach 40 billion won. If revenue recognition from the West Coast Phase 1 project begins in 2030, annual operating profit is expected to exceed 140 billion won."
* This article has been translated by AI.
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