LS ELECTRIC Co., Ltd. seen posting third-quarter operating profit above expectations... target price: 330,000 won

[Financial News] Korea Investment & Securities forecast that LS ELECTRIC Co., Ltd. would continue to post results above market expectations as it expands new orders, particularly for North American data centers. It maintained its “Buy” rating and target price of 330,000 won.
Jang Nam-hyeon, an analyst at Korea Investment & Securities, forecast in a report on the 13th that LS ELECTRIC Co., Ltd.'s third- and fourth-quarter consolidated revenue would rise 46.9% year on year to 1.7868 trillion won. Operating profit was estimated to increase 99.6% to 201.2 billion won, 5.7% above the market forecast of 190.3 billion won.
The analyst said that the increase in new orders since last year would translate into revenue, offsetting the negative impact of exchange-rate fluctuations. New orders in the power infrastructure division rose from 1.4 trillion won in the first half of last year to 2.2 trillion won in the second half, then expanded to 2.8 trillion won in the first half of this year.
“Third- and fourth-quarter revenue in the power division is expected to rise 65% year on year to 1.2158 trillion won,” Jang said. “As revenue from higher-margin export volumes makes up a larger share, the operating margin is also expected to improve by 3.3 percentage points to 13.3%. ”
The analyst also expected the growth in orders to continue. LS ELECTRIC Co., Ltd. won a 230.9 billion won contract last August to supply power equipment for a big tech company’s data center project. This month, it also signed a 181.2 billion won contract to supply power equipment for a hyperscaler data center in North America. The analyst forecast that the company would comfortably meet its annual new-order target of 6 trillion to 6.5 trillion won.
The analyst judged that the company was likely to secure additional orders as its track record of deliveries to U.S. data centers and on-site power generation customers grows, and as U.S. manufacturers increase capital investment in equipment. Its broad product lineup covering the entire power transmission and distribution chain was also cited as a strength, enabling it to meet the diverse power equipment needs within data centers.
“The period from securing an order to recognizing revenue for data center products is short—no more than a year,” Jang said. “As the expansion in new orders in the second half could quickly lead to upward revisions to next year’s earnings forecasts, growth could exceed expectations depending on future order wins.”

[email protected] Lee Jeong-hwa Reporter