Daishin Securities said on the 13th that as the supply shortage in the ultra-high-voltage transformer market deepens, major companies' order lead times (the period from contract to delivery) are expected to extend to as long as five years. Accordingly, it raised the target price to 4 million won from 3.3 million won. The previous session's closing price was 2.94 million won.
Heo Min-ho, an analyst at Daishin Securities, said, "Hyosung Heavy Industries' order contract lead time after the second quarter of 2026 is expected to expand to more than three years," adding, "Reflecting this, we changed the basis for calculating the target price to the projected results for 2029." He added, "This is a phase where corporate value should be evaluated based on medium- to long-term order backlogs rather than short-term results."
A longer lead time means that, from the perspective of corporations, they have already secured years' worth of work. In the ultra-high-voltage transformer market, supply shortages are lengthening the period from contract to delivery to as long as three to five years. As a result, contracts concluded now will translate into revenue years later, making it relatively certain to forecast future results.
A similar trend is emerging in the global market. GE Vernova said at the America Global Industrials Conference held in March that transformer production reservation slots are secured through 2031. With the spread of the concept of "slot reservations," which preempt production capacity, a structure is effectively taking shape in which years' worth of revenue is secured in advance.
Domestic companies are also assessed to have effectively secured long-term orders at a similar level. Heo said, "Domestic ultra-high-voltage transformer companies do not yet operate an official slot reservation system," but added, "Given that the contract period for the '765kV Transformer and Reactor Purchase Agreement' that Hyosung Heavy Industries signed in Feb. this year runs until Jan. 2031, the practical slot reservation lead time can also be seen as around five years." He added, "There is no formal system, but long-term volumes are already secured under the contract structure."
Daishin Securities also projected that earnings growth will be steep based on this order environment. Heo said, "Revenue in 2026 will be 7.13 trillion won, up 19% from a year earlier, and operating profit will rise 43% to 1.07 trillion won," adding, "In particular, the heavy industries business will lead the improvement in results."
Expansion in North America is cited as a key factor in profitability improvement. He said, "North America has high unit prices and strong profitability, so margin improvement will appear alongside revenue growth." The share of revenue from North America is projected to expand from 22% in 2024 to 32% in 2026 and 39% in 2027.
Capacity expansion is also expected to serve as a foundation for growth. Heo said, "Hyosung Heavy Industries is pushing to expand transformers and GIS (gas-insulated switchgear), expand its Memphis plant in the United States, and invest in HVDC (high-voltage direct current) facilities," adding, "Some HVDC facilities can also be used for transformer production, enabling flexible responses to rising demand."