A "superior emperor stock (a stock priced over 1 million won)" with a per-share price exceeding 3.9 million won has appeared. Hyosung Heavy Industries, a power equipment company, is the star. Notably, Hyosung Heavy Industries' stock kept rising even though its first-quarter operating profit fell short of the securities consensus (average forecast). Some in the securities industry even set a target price of 5 million won.
Hyosung Heavy Industries jumped 10.95% (399,000 won) to close at 3,941,000 won on the 27th. Just a year ago, the stock was in the 450,000-won range, and by this day it had skyrocketed 758%. The ascent has been steep. At the start of the year, the stock was 1,845,000 won, and it rose to 2,823,000 won on Feb. 27, just before the U.S.-Iran war broke out.
Right after the war, the share price fell to the 2.2 million-won range, but it steadily climbed, hitting "3 million won per share" for the first time on the 13th. Nine trading days later, it reached the 3.5 million-won range, and then in just one trading day it rose to 3.9 million won.
Hyosung Heavy Industries, which produces ultra-high-voltage power equipment such as transformers and circuit breakers, has seen its share price surge recently as the artificial intelligence (AI) cycle has arrived. In particular, as power demand has spiked worldwide on the back of AI data center expansions, the ultra-high-voltage power equipment market has begun to experience supply falling short of demand. As a result, the prevailing view is that, like the current semiconductor supply shortage, power equipment will also remain in a supply shortage.
The securities industry is also uniformly raising its target price for Hyosung Heavy Industries. Yuanta Securities Korea on this day presented a target price of 5 million won for Hyosung Heavy Industries.
Daishin Securities and Kyobo Securities raised their targets to 4.8 million won, and ▲ LS Securities and SK Securities to 4.7 million won ▲ Korea Investment & Securities Co. to 4.6 million won ▲ NH Investment & Securities to 4.5 million won ▲ Samsung Securities, Hana Securities, and BNK Investment & Securities to 4.3 million won ▲ Shinhan Investment & Securities to 4.2 million won.
Son Hyun-jung, an analyst at Yuanta Securities Korea, said Hyosung Heavy Industries is "still the most undervalued domestic power equipment company," adding, "Orders have expanded to an all-time high, and beyond order competitiveness centered on ultra-high-voltage in North America, the business scope is expanding to include responses to data center power structures."
Heo Min-ho, an analyst at Daishin Securities, said, "The current share price reflects a price-to-earnings ratio (PER) of 44 times based on this year's expected results, which is lower than GE Vernova's PER of 50 times, the highest among global power equipment companies." In particular, the explanation is that while global companies have faced bottlenecks, Korean power equipment corporations are penetrating the North American and other global markets faster than global firms such as GE Vernova.
What stands out is that although Hyosung Heavy Industries' first-quarter operating profit slightly missed the consensus, the securities industry continues to offer positive views. On the 24th, Hyosung Heavy Industries disclosed that it recorded consolidated operating profit of 152.3 billion won for the first quarter of this year. That was up 48.7% from a year earlier but below the consensus of 168.3 billion won.
Regarding the results, the analyst said, "This is not a deterioration in profitability but the effect of deferred operating profit due to differences in the timing of recognition," adding, "In the second quarter, about 40 billion won of deferred profit will be reflected, raising the performance level by a notch."
A sharp increase in new orders is also positive. Lee Min-jae, an analyst at NH Investment & Securities, said, "While first-quarter results for power equipment companies generally fell short of consensus, new orders surged," adding, "This is because investment in North American data centers has expanded, leading either to growth in new customer groups or increased demand from existing customers."
However, as Hyosung Heavy Industries' share price has become unusually high, it could affect turnover. For now, though, there appears to be no plan for a stock split. A Hyosung Heavy Industries official said, "We are not considering it at this time."