Hyosung Heavy Industries’ order and earnings growth remains solid; target price of 4 million won

[Financial News] Korea Investment & Securities expects Hyosung Heavy Industries’ third-quarter results to fall short of market expectations, but forecasts solid growth in new orders and medium- to long-term earnings. It maintained its Buy rating and set a target price of 4 million won, a 13% cut from its previous target.
Jang Nam-hyun, an analyst at Korea Investment & Securities, estimated in a report on the 14th that Hyosung Heavy Industries’ consolidated third-quarter revenue would rise 11.7% year over year to 1.8144 trillion won. He estimated operating profit at 289.6 billion won, up 31.8% and 8% below the market estimate of 314.9 billion won.
Some deliveries were disrupted by geopolitical risks in the Middle East, while deliveries in Europe and Asia were also delayed at customers’ request. However, those volumes are expected to be recognized as revenue in the fourth quarter. The construction division’s operating margin is expected to fall by at least 5 percentage points from the previous quarter due to one-off costs from rising raw material prices.
Jang said, “Growth in new orders remains rapid,” adding, “We estimate that new orders in the third quarter totaled at least 2.5 trillion won.”
Hyosung Heavy Industries signed a contract last month to supply ultra-high-voltage transformers to a U.S. big tech company. As data center operators directly procure the power equipment needed to build power grids, the entities ordering ultra-high-voltage transformers are expanding beyond traditional utility companies to include data center operators. The analyst also projected that the company would exceed its annual order target of 12 trillion won.
The analyst also expected profitability to improve as North America accounts for a larger share of revenue. Project-by-project currency hedging is helping limit the impact of exchange-rate fluctuations, and North America’s share of revenue is expected to rise again starting in the fourth quarter. The heavy industries division’s operating margin is projected to increase from 23.2% next year to 25.4% in 2028.
The target-price cut reflects lower valuations across the sector and the gap between the target price and the current share price. Hyosung Heavy Industries’ projected 2028 price-to-earnings ratio is 13.5 times, below the range of 17.9 to 28.7 times for global peers.
Jang said, “The compound annual growth rate in earnings per share from 2025 to 2028 is 41.8%, 12.5 percentage points above the sector average,” adding, “With the valuation discount having widened excessively relative to earnings growth, this is the right time to buy.”

[email protected] Lee Jeong-hwa Reporter