LS SECURITIES predicted on the 29th that Sanil Electric's operating performance in the second quarter of this year would significantly exceed market expectations. It raised the target stock price from the previous 120,000 won to 150,000 won while maintaining the investment opinion of 'buy.' The closing price for Sanil Electric on the previous trading day was 112,300 won.
LS SECURITIES projected that Sanil Electric's sales and operating profit in the second quarter of this year would reach 128.1 billion won and 46.1 billion won, respectively, up 70% and 88% compared to the previous year.
The strong performance is due to a surge in power grid sales and renewable energy sales, along with significant growth in the North American market focused on pole-mounted (PAD) transformers. Seong Jong-hwa, a researcher at LS SECURITIES, noted, "Other regions are also experiencing high growth, and the North American region will maintain stable growth."
The operating profit margin for the second quarter is expected to be 36%, an improvement of 3.4 percentage points compared to last year. Seong, the researcher, explained, "This year, we implemented a wage increase of about 5% in the second quarter, and other costs increased due to remodeling of the shipping facility," adding, "We considered that the Korean won has appreciated against the dollar compared to the previous quarter and some impacts from the U.S. reciprocal tariff."
Additionally, the researcher stated, "With factors such as improved product mix and cost reduction continuing, high profitability in the mid-30% range is expected to persist."
Annual operating results are also expected to be positive. LS SECURITIES forecasts that Sanil Electric's sales will increase by 30% year-on-year to 434 billion won, with orders also expected to rise by 27% from last year's 408.6 billion won to 520 billion won.
The researcher remarked, "While the order amount may be slow in the second quarter due to wait-and-see before the confirmation of the U.S. reciprocal tariff, we expect to reach target levels sufficiently in the third and fourth quarters."
He continued, "Sanil Electric's valuation capacity is sufficient, and the upward adjustment of the target stock price is a gradual setting process."