[Click eStock] LS Electric, Power Infrastructure Orders Surge 'Performance Improvement'... Lower Start, Higher End

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 2nd that it maintains a buy rating and a target price of 77,000 KRW for LS ELECTRIC.

Yoo Jae-sun, a researcher at Hana Financial Investment, stated, "Considering that power infrastructure performance typically improves from the beginning of the year toward the second half and the rapidly increased order backlog, there is a high possibility of quick performance improvement," adding, "The progress of numerous solar EPC projects ordered last year may also reduce losses in the renewable energy sector in the second half." As of 2022, the price-to-earnings ratio (PER) is 10.3 times, and the price-to-book ratio (PBR) is 0.9 times.

First-quarter sales amounted to 729.7 billion KRW, a 23.8% increase compared to the previous year. All sectors showed growth compared to the previous year, with significant sales growth confirmed in the power equipment sector. Operating profit improved by 73.7% year-on-year to 40.6 billion KRW. The power equipment sector saw a substantial increase in profit margin due to sales growth from increased volume and exchange rate appreciation. Demand in the second quarter is also expected to remain solid both domestically and internationally, which is positive. Power infrastructure reduced its deficit through overseas performance compensating for domestic sales decline. Sales to government offices are expected to improve in the second quarter. With increased new orders and a still high backlog level, an annual performance improvement trend can be anticipated.

Researcher Yoo said, "Amid a positive industry outlook, power infrastructure orders are rapidly increasing," and added, "Many domestic large corporations are investing, and profit improvement is expected with sales growth within the year." He further noted, "Sensitivity to cost changes due to raw material price fluctuations is low, and the exchange rate is favorable, so concerns about performance due to macro variable changes are limited."

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