[Click eStock] "LS Electric, US Subsidiary Growth Expected... New Target Price Set at 210,000"

Applying an Average PER of 27x for Global Power Equipment Companies
Doubling Facility Capacity in the US by 2035
Expecting Profitability Improvement in Power Business through Transformer Sales

Daishin Securities on the 24th newly issued a 'Buy' investment rating and a target price of 210,000 KRW for LS ELECTRIC. The target price is based on the performance from Q3 2024 to Q2 2025, applying a price-to-earnings ratio (PER) of 27 times, which is the average PER of global power equipment companies. This corresponds to a PER of 18 times based on 2026 performance, grounded on the average PER from 2009 to 2023.

Researcher Heo Min-ho of Daishin Securities cited three factors as the basis for future performance: ▲performance growth due to transformer capacity expansion ▲normalization of profitability following a large-scale battery inventory loss at LS Energy Solution in the first half of 2024 ▲effects of expanding production capacity of distribution panels in the U.S. and establishing a distribution network for power distribution equipment. Researcher Heo stated, "Investment in the U.S. transmission network is expected to surge until 2035, which will exacerbate the shortage of power equipment supply," adding, "In particular, as demand for ultra-high voltage transformers increases, there are plans to double transformer facility capacity by Q4 2025." Performance growth is also anticipated through improving efficiency and expanding production capacity of the U.S. distribution panel manufacturing subsidiary, as well as expanding the sales network for distribution equipment.

Sales of the domestic headquarters and the power business including KOC Electric are projected to reach 3.25 trillion KRW in 2026, with operating profit of 457.5 billion KRW, representing increases of 24% and 75% respectively compared to 2023. For overseas subsidiaries, driven by improved performance of the U.S. holdings, operating profit is expected to be 44.7 billion KRW (+46% YoY) in 2025 and 55.4 billion KRW (+24%) in 2026. Operating profit for Q3 2024 is forecasted at 87.4 billion KRW (+25%), and annual operating profit at 366.3 billion KRW (+13%). Sales are expected to be 1.04 trillion KRW (+2%), with profitability improvement in the power business anticipated due to increased sales of high-margin ultra-high voltage transformers.

This content was produced with the assistance of AI translation services.