Yuanta Securities Korea on the 4th said HD Hyundai Electric can enjoy both improved earnings stability and a multiple re-rating effect as it expands its portfolio to cover the top end of the grid (765kV) and the bottom end (distribution) at the same time.
It kept its investment opinion at "Buy" and raised the target price to 1.16 million won from 1 million won. The previous trading day's closing price of HD Hyundai Electric was 987,000 won.
Son Hyun-jung, an analyst at Yuanta Securities Korea, said, "The gigawatt (GW)-level concentrated load of artificial intelligence (AI) data centers is entering a range that is hard to handle with the existing transmission system," and noted, "If the voltage is raised to 765kV, the number of lines can be drastically reduced for the same capacity delivery, making it a structural alternative that eases permitting and construction bottlenecks."
Son said, "HD Hyundai Electric is expanding its presence in the North American ultra-high-voltage market based on its domestic 765kV supply references," and added, "Production-capable corporations for 765kV are extremely limited, and product reliability is the entry barrier." Son explained that increasing the share of 765kV signifies a fundamental uplift in the profitability profile, not just higher sales.
HD Hyundai Electric recently completed and began operating a new distribution equipment plant based on a Smart Factory in Cheongju, North Chungcheong. It is seen as targeting North American big tech corporations building AI data centers.
Son said, "Attention should be paid to the fact that the company has evolved from indirect benefits via utilities to maximizing profitability through direct orders from big tech," adding, "A vertically integrated portfolio spanning from ultra-high voltage to medium- and low-voltage distribution is a strong competitive edge versus overseas rival corporations."