[Click eStock] "LS ELECTRIC Expected to Triple Ultra-High Voltage Transformer CAPA... Target Price Raised"

On December 4, Yuanta Securities announced that it is raising its target price for LS ELECTRIC to 600,000 won, reflecting the expansion of ultra-high voltage transformer production capacity (CAPA) and the increase in the proportion of high-priced product mix.

Son Hyunjung, a researcher at Yuanta Securities, explained in a report released that day that the structure for tripling the ultra-high voltage transformer CAPA at the Busan plant by next year is already becoming clear. Based on sales, CAPA is expected to increase from approximately 200 billion won in 2024 to 350 billion won in 2025, and to 600 billion won in 2026. Son noted, "With new personnel being hired and bottlenecks in each process being improved, the existing plant is already close to full operation," adding, "Even after the expansion plant begins operation this month, it should be possible to achieve an operating rate of 70-90% in the first year without a separate long-term ramp-up period."

LSPS is also expanding its annual CAPA to 200 billion won, and the potential for turnkey and packaging supply with its parent company is significantly strengthening synergies within the group. He explained, "With the full integration of LSPS, the portfolio is now complete across voltage classes and uses, including ultra-high voltage, medium and low voltage, distribution, and marine transformers, thereby enhancing both the scale and profitability of the power equipment chain."

He also viewed positively the fact that demand for HVDC transformers and artificial intelligence (AI) data centers is structurally changing LS ELECTRIC's power infrastructure mix, leading to improvements in both average selling price (ASP) and margins. The power infrastructure division is expected to achieve sales of 2.7348 trillion won, operating profit of 336.6 billion won, and an operating profit margin (OPM) of 12.3% next year, driven by simultaneous growth in P (ASP increase) and Q (CAPA expansion). Sales and operating profit are projected to increase by 45.1% and 66.2%, respectively, compared to the same period last year.

Accordingly, LS ELECTRIC's consolidated sales next year are forecast to reach 5.8393 trillion won, up 19.0% from the previous year, and operating profit is expected to rise by 50.6% to 617.4 billion won, making a double-digit operating profit margin (OPM 10.6%) achievable.

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