Yuanta Securities Korea assessed on the 28th that Hyosung Heavy Industries recorded its largest-ever performance in the second quarter of this year and has entered a performance upgrade phase. It maintained a buy investment rating and adjusted its target price upward from 1.22 million won to 1.5 million won. The closing price of Hyosung Heavy Industries on the previous trading day was 1.125 million won.
Yuanta Securities Korea positively evaluated that Hyosung Heavy Industries is expanding its high-margin orders and securing additional capacity (CAPA).
Son Hyun-jung, a researcher at Yuanta Securities Korea, said, "Hyosung Heavy Industries signed a contract worth 350 billion won for gas-insulated switchgear (GIS) with a major power company in the U.S. on the 1st of this month, and it continues to receive orders for high-spec, large-capacity products such as 765 kV ultra-high voltage transformers and 800 kV GIS."
Production capacity (CAPA) is also being expanded. Researcher Son forecasted, "A GIS export-only factory is under construction in Changwon, and upon completion next year, it could lead to an increase in annual revenue of 340 billion won."
Additionally, she added, "The ultra-high voltage transformer factory in Memphis, which is being expanded to twice its original size, is scheduled for completion next year, and separate additional investments in North America are also under review."
Hyosung Heavy Industries recorded a consolidated revenue of 1.5253 trillion won and an operating profit of 164.2 billion won in the second quarter of this year (April to June). Both figures represent increases of 27.8% and 162.1% compared to the same period last year, marking the largest quarterly performance ever.
Researcher Son explained, "The industrial sector led the surprise performance (earnings surprise), and as the high-margin ultra-high voltage transformer orders for North America were reflected, the operating profit margin of the U.S. production corporation exceeded 35%, while the operating profit margin in the power sector also recorded 18.7%, improving profitability structure."