NH Investment & Securities raised its target price for HD Electric to 1.5 million won from 1.2 million won, citing increased orders for extra-high-voltage transformers in North America. The previous session's closing price was 1,248,000 won.
Lee Min-jae, an analyst at NH Investment & Securities, said, "With the share of North American sales growing around extra-high-voltage products, and delivery times getting longer after 2030, order visibility is increasing," and noted, "A full-fledged expansion into the power distribution market is also expected."
Earlier, HD Hyundai Heavy Industries disclosed on Apr. 22 that it signed a contract to supply 684MW worth of power generation engines valued at about 627.1 billion won with U.S. energy infrastructure developer Aperion Energy Group.
The analyst predicted, "With a high likelihood that the equipment will be used for data centers, the business will expand beyond supplying standalone engines to power solutions that include control systems, power conversion equipment, and maintenance."
In particular, "With HD Hyundai Electric signaling an entry into the data center market, medium- to long-term collaboration with HD Hyundai Heavy Industries is expected," the explanation said. The company signaled its entry into the data center market in Feb. by signing MOUs with switchgear manufacturers SABRE and Golden Anvil.
However, first-quarter results this year are expected to slightly miss market expectations. On a consolidation basis, first-quarter revenue was 1.1 trillion won and operating profit was 248.3 billion won, up 9% and 14% year over year, but seen falling short of expectations. This is because Middle East exports are expected to face disruptions as the Strait of Hormuz is blocked due to the war between the United States and Iran.
Even so, the trend of expanding orders for extra-high-voltage transformers centered on the North American market is expected to continue. The analysis is that, like Hyosung Heavy Industries, it will continue to benefit from increased investment in North American power infrastructure.