Sanil Electric is expected to surpass 40 billion won in operating profit for the first time in the second quarter (April to June). This follows record quarterly earnings from the first quarter. Sanil Electric plans to focus on the U.S. market, which accounts for about 70% of its revenue.
On the 14th, four securities firms (Shinhan Investment, Yuanta, IBK Investment, and LS ELECTRIC) estimated Sanil Electric's average revenue for the second quarter to be 112 billion won, a 49% increase compared to the second quarter of last year.
During the same period, operating profit is expected to rise by 71% to 41.8 billion won. This is the first time quarterly operating profit will exceed 40 billion won. For the first half of the year (January to June), revenue is anticipated to be 210.8 billion won, up 45% compared to the first half of last year, with operating profit expected to reach 79.3 billion won, a 66% increase.
Sanil Electric's two major revenue streams are the power transmission and distribution network and the transformer business related to renewable energy. As of the first quarter, revenue ratios from the power network and renewable energy sectors were each 46% and 51%. Most of its revenue comes from exports, with 96% of the 98.8 billion won in revenue from exports in the first quarter.
The largest market is the United States. In the first quarter, the U.S. accounted for 69% (68.4 billion won) of total revenue. The U.S. is a massive market, representing 25% (approximately 10 trillion won) of the global distribution transformer market, with Korean companies holding the number one market share.
With increasing investments in artificial intelligence (AI) and data center construction, electricity demand in the U.S. is surging. The expanding demand for power network replacements and modernization has led to increased orders for Sanil Electric in the U.S. Sanil Electric aims for new orders worth 520 billion won this year, having secured 169.3 billion won worth of orders in the first quarter.
The company noted, "More than 60% of our revenue comes from the U.S., but market share is still below 2%, indicating significant growth potential."
In response to increased export volumes to the U.S., Sanil Electric expanded its Ansan Factory 2, raising its annual production capacity to 300 billion won. The increase in production is expected to be reflected in the third quarter's performance. The combined production capacity of Factory 1 and Factory 2 is currently 600 billion won per year. Sanil Electric also plans a second expansion of Factory 2 next year.
Sanil Electric is regarded as having the highest profitability in the domestic and international power equipment industry. The operating profit margin, a profitability indicator, is expected to range from 36% to 38% in the second quarter. Sanil Electric's annual operating profit margins showed an upward trend at 10.6% in 2022, 21.7% in 2023, and 32.7% in 2024. This year, there are projections that it may reach the mid-30% range. In comparison, LS ELECTRIC, a large power equipment company with a high ratio of distribution business, recorded an annual operating profit margin of 8.6% last year.
Sanil Electric has increased its orders for higher-priced ground transformers, thereby boosting profitability. It is analyzed that diversifying suppliers for raw materials, which were previously reliant on 1 to 2 sources, has also contributed to improving profitability.