NH Investment & Securities has lowered its target price for LS ELECTRIC from 325,000 won to 300,000 won, reflecting an increase in the cost of equity due to rising interest rates. However, the firm maintained its 'buy' rating, citing the company's long-term growth potential driven by expanding North American clients among global tech giants, increased domestic data center investments, and expanded capital expenditures.
Lee Min-jae, a researcher at NH Investment & Securities, noted, "For the third quarter, consolidated revenue reached 1.9 trillion won, a 54% increase year-on-year, while operating profit surged 132% to 233.5 billion won, exceeding the market consensus of 194.6 billion won." He attributed this growth to improved profitability in the power infrastructure sector and increased sales of electrical equipment in North America.
Regarding the profitability of the electrical equipment sector, he stated, "The operating profit margin was low due to a decline in the won-dollar exchange rate and poor profitability in Europe and Southeast Asia. Although price increases were implemented in the first half of the year due to rising costs from silver price hikes, these were effectively passed on in the domestic and North American markets, but not sufficiently in Europe and Southeast Asia."
He added, "With additional price increases starting in October, we expect the weak profitability in the electrical equipment sector to recover in the fourth quarter."
On long-term growth prospects, he mentioned, "Investments in data centers by major domestic companies such as SK, GS, Samsung, and Hyundai are expected to increase, and the transition to direct current (DC) to meet rising power density is accelerating."
Lee also pointed out, "LS ELECTRIC has strengths in gray space rather than white space within data centers, and the launch of new products such as solid-state transformers (SST) and solid-state circuit breakers (SSCB) will proceed at a pace similar to that of global competitors." He emphasized, "The gradual transition to 800V direct current is expected to lead to increased revenue per megawatt."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.