NH Investment & Securities said on the 10th that CS Wind is set to benefit as renewable energy draws attention as an alternative amid rising energy prices. It kept its Buy rating and raised its target price to 79,000 won from 63,000 won. The previous trading day's closing price for CS Wind was 67,700 won.
Jung Yeon-seung, an analyst at NH Investment & Securities, said, "Investor sentiment toward renewable energy is improving due to the recent surge in energy prices," and added, "Accordingly, valuations (corporate value) of wind turbine makers are rising in tandem."
NH Investment & Securities raised its operating profit estimates for CS Wind for this year and next by 12% and 14%, respectively. The adjustment reflects improved profitability in the tower segment, including the exchange rate and the Vietnam and China subsidiaries.
Risk factors include delayed productivity improvement at the U.S. tower subsidiary and a lack of orders for offshore wind substructures. However, it projected that concentrated demand for onshore wind is likely until before U.S. subsidies expire, so there should be no issue with CS Wind securing tower orders through 2027.
Jung said, "Considering the expansion of global renewable energy investment and even the demand for building in-house power plants to secure electricity for big tech data centers, the market has significant room to grow," and added, "If the company wins offshore wind substructure orders in the second half, further valuation expansion is possible."
It noted that while there is domestic policy momentum, from a topline perspective, increasing wind demand in the United States and Europe is likely to have a more direct impact on results than in Korea.
CS Wind's first-quarter revenue is projected at 747.4 billion won and operating profit at 76.6 billion won, in line with market expectations. Compared with the same period a year earlier, revenue fell 17.1% and operating profit decreased 38.8%.
Jung added, "For structural profitability improvement, a recovery in productivity at the U.S. subsidiary is necessary," but noted, "From an orders standpoint, considering U.S. onshore wind demand, achieving the annual tower order target of $1.7 billion should be manageable."