NH Investment & Securities on the 27th said LS Electric is expected to ease valuation pressure through strong profit growth driven by full-scale top-line expansion and profitability gains. It maintained a Buy rating and raised the target price 25% to 275,000 won from 220,000 won. LS Electric's previous closing price was 226,500 won.
NH Investment & Securities cited as reasons for maintaining its view: ▲ a growing pool of North American data center customers ▲ increasing reshoring projects at home and abroad ▲ entry into a phase of direct earnings improvement on rising domestic investment, including Korea Electric Power Corporation.
It explained the target price was raised by increasing EBITDA in the power equipment and power infrastructure segments by 13% as big tech customers expand and domestic investment rises, and by adjusting the EV/EBITDA multiple to 25 times from 24 times.
LS Electric's customers are on the rise. Lee Min-jae, an analyst at NH Investment & Securities, said, "Through contracts with big tech that began last year, order value is expected to increase from this year, along with an expansion of customers and products," adding, "Orders disclosed in the first quarter show an expansion of the customer base, and product diversification is also underway from alternating current (AC) power equipment to direct current (DC) power equipment."
For LS Electric, because product development has been underway for a long time, expansion of cooperation with multiple big tech firms is also expected.
Lee said, "With the investment in MCM Engineering in Utah proceeding as planned, we expect more than 700 billion won in revenue by 2030 through additional investment in 2028," adding, "In addition to the domestic headquarters, we also plan to expand switchgear production capacity through collaboration with partner companies."