Stock Hits 4 Million Won... Which ETFs Are Gaining Despite Weak Q1 Results?

Power Equipment ETFs Sweep Top 3 Weekly Returns

"TIGER Korea AI Power Equipment TOP3 Plus" Surges 27.31%

First-Quarter Earnings Fall Short, but Surge in New Orders Fuels Optimism

Hyosung Heavy Industries Share Price Surpasses KRW 4 Million Intraday

Exchange-traded funds (ETFs) specializing in power equipment are experiencing rapid gains. Although power equipment companies' first-quarter earnings this year fell short of market expectations, anticipation driven by a significant increase in new orders appears to be fueling the rise in share prices.

The 200MW class HVDC system supplied by Hyosung Heavy Industries to the Korea Electric Power Corporation Yangju Substation. Hyosung Heavy Industries.

According to ETFCheck on April 28, as of the previous day, the TIGER Korea AI Power Equipment TOP3 Plus ETF surged 27.31% over the past week, delivering the highest return among all ETFs excluding leveraged and inverse products. KODEX AI Power Core Equipment gained 26.96%, and HANARO Power Equipment Investment rose 26.95%, making power equipment ETFs the top three performers in terms of returns.

As companies are releasing their first-quarter results, power equipment makers have posted figures below market forecasts. On a consolidated basis, Hyosung Heavy Industries reported first-quarter sales of KRW 1.3582 trillion, up 26% year-on-year, and operating profit of KRW 152.3 billion, up 48.8%. However, the first-quarter operating profit consensus for Hyosung Heavy Industries (the average of securities firms’ estimates) was KRW 168.3 billion, meaning actual results fell short of expectations.

LS ELECTRIC recorded first-quarter sales of KRW 1.4 trillion, up 33.4%, and operating profit of KRW 126.6 billion, up 45%, but this also fell about 5% below the operating profit consensus.

However, market attention shifted from underwhelming earnings to a surge in new orders. Minjae Lee, a researcher at NH Investment & Securities, explained, "All domestic and international power equipment companies that finished reporting first-quarter earnings underperformed against the consensus, but new orders increased significantly." He added, "The reasons for disappointing first-quarter results include soaring raw material costs, accounting standard recognition, and higher expansion-related labor costs. However, new orders rose sharply, mainly due to increased investment in North American data centers, which led to a growing base of new customers and increasing demand from existing clients."

Hyosung Heavy Industries secured the largest-ever U.S. 765kV transmission network order among domestic power equipment companies (KRW 787 billion), and achieved its highest-ever quarterly new order intake, mainly from the highly profitable North American market. New orders totaled KRW 4.1745 trillion, with a backlog of KRW 15.1 trillion. Dongheon Lee, a researcher at Shinhan Securities, said, "Although Hyosung Heavy Industries' first-quarter results missed expectations due to delayed revenue recognition, new order growth was explosive. The power equipment order backlog alone stands at KRW 15 trillion—enough for nearly four years of production." Shinhan Securities raised Hyosung Heavy Industries' target share price from KRW 2.9 million to KRW 4.2 million, seeing concerns about the sustainability of the North American boom as limited in the short term given factors such as reshoring, aging power grids, and investment in artificial intelligence (AI) data centers. Thanks to these outlooks, Hyosung Heavy Industries' share price surpassed KRW 4 million intraday for the first time ever on the previous day.

LS ELECTRIC also hit a new all-time high, climbing to KRW 261,500 intraday on the same day. Hyejeong Jeong, a researcher at KB Securities, said, "LS ELECTRIC's results and new orders will be driven by sustained strength in the transmission segment and rising demand for switchboards and distribution equipment as the distribution segment begins to ramp up." She added, "The first-quarter order backlog expanded to KRW 5.6 trillion. With regular orders from existing customers and expectations for new client acquisition within the year, the scale of new orders is likely to grow rapidly over the next several years."

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