SK Securities said on the 27th that Sanil Electric is likely to be re-rated as a data center beneficiary stock through orders for data center transformers. It initiated coverage with a Buy rating and a target price of 220,000 won. The previous trading day's closing price of Sanil Electric was 168,600 won.
Na Min-sik, an analyst at SK Securities, assessed that Sanil Electric is highly likely to be re-rated as a data center beneficiary stock going forward.
Na said, "This year, it plans to move away from the indirect data center supply structure through on-site generation at existing sites," adding, "By supplying in-data-center mounted transformers with a higher average selling price (ASP) to data center developers and EPC (engineering, procurement and construction) firms, incorporation into the data center value chain is becoming visible."
Previously, it supplied indirectly through the on-site power generation facilities of data centers, but as it begins to supply transformers and other equipment that go directly into data centers, the analysis is that the likelihood of being evaluated as a data center beneficiary stock has increased.
Na added, "Last year, LS Electric supplied to the artificial intelligence (AI) service company xAI, and as big tech orders expanded in succession, multiple (price-to-earnings multiple) expansion occurred," and said, "This year, starting with direct AI data center orders, Sanil Electric is likely to be incorporated as a player targeting AI data centers, enabling multiple re-rating."
The ultra-high-voltage transformer market was also presented as a growth driver for Sanil Electric.
Na said, "Sanil Electric plans to enter the ultra-high-voltage special transformer market to respond to package supply demand from existing renewable energy-related customers," adding, "For technology verification and reference acquisition, it already supplied a 154 kV (kilovolt) ultra-high-voltage transformer to Korea Railroad Corporation (KORAIL) in 2024."
Na continued, "It plans to start building production facilities on idle land at the second plant within this year and begin full-scale mass production in 2028," adding, "Based on the high ASP, it is expected to become a key medium- to long-term growth driver."