An "ultra blue-chip emperor stock (a stock priced over 1 million won)" with a per-share price above 3.9 million won has appeared. The protagonist is Hyosung Heavy Industries, a power equipment company. Notably, even though Hyosung Heavy Industries' first-quarter operating profit fell short of the securities industry consensus (average forecast), the share price kept climbing. Some in the securities industry set a target price of 5 million won.
Hyosung Heavy Industries closed at 3,941,000 won on the 27th, up 10.95% (399,000 won). A year ago, the shares were in the 450,000-won range, and by this day they had soared 758%. The upward curve is steep. At the start of the year, the shares were 1,845,000 won, and they 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 and on the 13th, for the first time, hit "3 million won per share." After that, in nine trading days, it reached the 3.5 million-won range, and in just one more 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 arrived. In particular, as power demand is skyrocketing worldwide, centered on the expansion of AI data centers, the supply in the ultra-high-voltage power equipment market has begun to fall short of demand. As a result, the prevailing view is that, similar to the current semiconductor shortage, a supply shortage in power equipment will persist.
The securities industry is also collectively raising target prices for Hyosung Heavy Industries. Yuanta Securities Korea set a target price of 5 million won on the day.
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 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 a record-high level, and beyond competitiveness in orders focused on ultra-high-voltage in North America, the business scope is expanding to responding to data center power structures."
Heo Min-ho, an analyst at Daishin Securities, said, "Based on this year's expected results, the current price implies a price-earnings ratio (PER) of 44, but that is lower than the PER of 50 for GE Vernova, which has the highest valuation among global power equipment companies." In particular, the explanation is that while global companies experienced bottlenecks, Korean power equipment companies have been penetrating global markets, including North America, faster than global companies such as GE Vernova.
What stands out is that although Hyosung Heavy Industries' first-quarter operating profit slightly missed consensus, the securities industry continues to offer positive views. On the 24th, Hyosung Heavy Industries disclosed that on a consolidation basis, first-quarter operating profit was 152.3 billion won. That was up 48.7% from a year earlier but below the consensus of 168.3 billion won.
On the results, the analyst said, "This is not a slowdown in profitability but the impact of deferred operating profit due to differences in recognition timing," adding, "In the second quarter, about 40 billion won of deferred profit will be reflected, lifting the results level by one notch."
A sharp increase in new orders is also positive. Lee Min-jae, an analyst at NH Investment & Securities, said, "Power equipment companies' first-quarter results generally fell short of consensus, but new orders rose sharply," adding, "This is because investment in North American data centers has expanded, which we judge has increased the pool of new customers or boosted demand from existing customers."
However, as Hyosung Heavy Industries' share price has become unusually high, it could affect trading turnover. For now, there appears to be no plan for a stock split. A Hyosung Heavy Industries official said, "We are not considering it at this time."