When China Blocked the Way, LS Eco Energy Rowed On... Simultaneous Launch of Rare Earths and HVDC [Click e-Stock]

According to analysis from the securities industry, LS Eco Energy is expected to be re-evaluated from a simple cable company to a key supplier of core materials for the robotics and defense value chain.

On April 29, according to SK Securities, analyst Minshik Na maintained a 'Buy' rating on LS Eco Energy and raised the target price from 48,000 won to 90,000 won. This adjustment is based on the increased visibility of the rare earth metals business and the company's securing of mid- to long-term growth drivers through high-voltage direct current (HVDC) cables.

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First, analyst Na pointed out that LS Eco Energy's business identity is shifting from a single cable business to a dual focus on cables and core minerals. He stated, "Based on 30 years of accumulated experience in wire manufacturing and metal processing know-how in Vietnam, a premium for non-China rare earth supply chains is anticipated," and added, "Stock price momentum will strengthen in line with the progress of the rare earth business."

The rare earth metals business is rapidly progressing across three stages, with mass production targeted for the second half of this year. The first stage involves samarium-cobalt permanent magnets used in defense materials, the second stage focuses on heavy rare earth elements, and the third stage on neodymium.

Analyst Na explained, "As China tightens export controls on rare earth elements, the reconstruction of non-China supply chains has already become a matter of timing. With the U.S. Department of Defense aiming to reduce dependence on Chinese rare earths for defense purposes, LS Eco Energy is likely to be re-evaluated as a core materials supplier in the robotics and defense value chain."

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The HVDC cable business, essential for offshore wind power and long-distance transmission grid construction, is also a key driver for the company's next growth phase. LS Eco Energy is planning to build an HVDC plant worth approximately 800 billion won at the Phu My port in Vung Tau, Vietnam.

The Vietnam base offers overwhelming price competitiveness, with labor and electricity costs being low and construction expenses about one-third of those in the United States. Analyst Na emphasized, "The Vietnamese government is pursuing an HVDC project worth 15 trillion won to connect the north and south of the country by 2030, and with a significant increase in offshore wind power capacity targets, long-term demand will be supported."

He added, "The significance of the rare earth metals business re-evaluation lies not just in sales volume, but in the qualitative transformation of the business. As valuation indicators such as price-earnings ratio (PER) move into the value chain of high-growth themes like defense and robotics, a re-rating of the stock price is expected."

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