[Click eStock] LS Cable Asia, Many Positive Factors... Performance Expected This Year

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 20th that it maintains a 'Buy' investment rating and a target price of 10,000 KRW for LS Cable Asia due to many positive factors. Interest in the cable industry is increasing, and the benefits from rising copper prices, improved performance from the 2021 economic recovery, and new growth drivers in submarine cables are attractive factors.

First, it is judged that sales will exceed estimates due to the rise in copper prices, the raw material for cables. Copper prices reflect spot prices and are linked to sales. Although profit linkage is limited, the overall sales of LS Cable Asia in 2021 are estimated to increase by 22% compared to the previous year due to rising copper prices. The rise in copper prices indicates an increase in cable demand from economic recovery and an expansion of transmission and distribution investments by governments due to increased power consumption. LS Cable Asia, which holds the number one market share in Vietnam, is expected to benefit from the expansion of cable-related infrastructure investments in Vietnam and Southeast Asia.

Next is the increase in demand for submarine cables due to expanded investments in the renewable energy sector. Among the cable portfolio, submarine cables are a high value-added area and are expected to be a new growth and revenue source for the cable industry in the long term. Demand for submarine cables is occurring in Europe and the United States, but some sales are also expected in Vietnam, where renewable energy investments have been made. LS Cable (the largest shareholder of LS Cable Asia) possesses technological competitiveness in submarine cables and is expanding its global market share. When LS Cable secures orders in Asia, LS Cable Asia is responsible for supply, which is expected to be a new growth and revenue source in the future.

Park Kang-ho, a researcher at Daishin Securities, said, "The stock price of LS Cable, a non-listed company, has risen 57.4% since the beginning of the year due to improved performance and submarine cable orders, which expanded the perception of undervaluation," adding, "The stock price of LS Cable Asia has risen 3% since the beginning of the year, and reflecting the estimated 76.4% increase in operating profit this year, further gains are expected. Considering the difficulties in investing in LS Cable, investments related to the cable industry's boom are judged to be better through LS Cable Asia."

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