Yuanta Securities Korea said on the 4th that LS ELECTRIC is set for full-fledged top-line growth as its ability to supply expands with increased production capacity for ultra-high-voltage transformers and as the average selling price (ASP) of high-priced HVDC transformers improves. It maintained its investment opinion of Buy and raised its target price to 600,000 won from 380,000 won. LS ELECTRIC's previous trading day closing price was 478,500 won.

A view of the Second Production Building at the LS ELECTRIC Busan business site. /Courtesy of LS ELECTRIC

Researcher Son Hyeon-jeong at Yuanta Securities Korea, after visiting LS ELECTRIC's Busan plant on the 27th–28th of last month, said, "The Busan ultra-high-voltage transformer production capacity (CAPA) appears set to triple by 2026."

According to Son, LS ELECTRIC's production capacity for the Busan ultra-high-voltage transformer business, on a sales basis, is expected to increase from about 200 billion won in 2024 to 350 billion won in 2025 and 600 billion won in 2026.

Son said, "While hiring new staff and continuously resolving bottlenecks in the production process, the existing plant is already running close to full tilt," adding, "When the expanded plant comes online in December, without a lengthy acclimation period, we should be able to raise the utilization rate to 70%–90% from the first year."

Positive changes are continuing on the demand side as well. Son said, "As demand for high-voltage direct current (HVDC) transformers and artificial intelligence (AI) data centers grows, the product mix of the power infrastructure products made by LS ELECTRIC is changing," adding, "Because of this, the ASP of the products is rising and profitability is improving together."

LS ELECTRIC's inclusion of subsidiary LS Power Solution (LSPS) was also cited as a growth driver. Son said, "By building a full lineup that spans the entire range of power equipment—from ultra-high voltage to medium and low voltage, distribution, and marine transformers—group-level top-line growth and profitability improvement are expected simultaneously."

He went on, "With LSPS joining, competitiveness in packaging and turnkey orders that bundle transformers has strengthened," adding, "LSPS is also expanding its production capacity to an annual scale of 200 billion won, making the synergy within the group even more pronounced."

※ This article has been translated by AI. Share your feedback here.