On the 22nd, Hana Securities said LS Electric, which posted its biggest quarterly results of the year, is expected to continue expanding market share and improving margins on the back of growing investment in data centers and North American artificial intelligence (AI) infrastructure.
It kept a "buy" investment rating and raised the target price to 220,000 won, up 77.4% from the previous level. LS Electric's closing price the previous day was 184,700 won.
Hana Securities said LS Electric is sailing smoothly, with first-quarter results this year meeting market expectations (consensus).
LS Electric's first-quarter revenue this year was 1.3766 trillion won, up 33% from a year earlier, and operating profit was 126.6 billion won, up 45%.
Hana Securities analyzed that as big tech corporations sharply increase data center investment, the market has entered a "distribution cycle" in which demand is surging for power infrastructure product lines such as ultra-high-voltage transformers and switchgears.
New orders in the first quarter this year were 1.1 trillion won, up 27% from a year earlier, and the order backlog came to 5.6 trillion won, up 600 billion won from the previous quarter.
Researcher Yu said, "The power and infrastructure sector is maintaining double-digit margins alongside steep revenue growth," adding, "Multiple additional orders from big tech are expected within the year, and given the short lead times of the products, there is a strong possibility that future earnings estimates will be revised up further depending on the order size."
LS Electric plans to expand production capacity at the MCM plant in Utah, United States, by 2027. Depending on market conditions, it is also reviewing further expansions at the Cheongju plant in Korea and new plants in Texas and Southeast Asia.
Yu said, "With expanded transformer production capacity and increased switchgear orders, the trend of revenue and profit rising throughout the year will continue."