The top three domestic power equipment giants—Hyosung Heavy Industries, HD Hyundai Electric, and LS Electric, which dominate the global power equipment market—are showing a stock price recovery following recent announcements of strong results. Even as stock prices had been adjusted downward due to unprecedented geopolitical risks, growing expectations for first-quarter results have driven stock prices to quickly recover to pre-war levels. In particular, LS Electric's stock price has risen by 38% compared to pre-war levels, indicating renewed investor confidence.
LS Electric recorded sales of 1.3766 trillion won and operating profit of 12.666 billion won in its recently released consolidated first-quarter results. Both sales and operating profits increased by 33.38% and 44.96% year-on-year, respectively. The fact that the first-quarter operating profit exceeded 12 billion won for the first time holds significant meaning. The core driver of this growth has been explosive expansion in the North American market, where North American sales nearly doubled by 80% year-on-year, achieving a quarterly record high. This is a direct result of expanded data center investments by global big tech companies and increased equipment investments in key industries such as semiconductors.
The growth in LS Electric's results has been significantly driven by a surge in sales of ultra-high voltage transformers and an expansion of production capacity. Sales of ultra-high voltage transformers increased by 83% year-on-year, attributable to the full operation of the secondary production facility in Busan, which expanded production capacity from 200 billion won to 600 billion won. Yu Jae-seon from Hana Securities Research noted that the demand increase in domestic and international data center and renewable energy markets is sustaining the outward expansion of the power business, and projected that the operating profit margin would exceed 10% excluding one-time costs such as labor costs. He also added that big tech data center investments are driving structural growth in the distribution board sector, and with the expansion of diverse product lines such as onsite power generation sources and energy storage systems, significant sales and orders are expected within the year.
Hyosung Heavy Industries and HD Hyundai Electric are also expected to show positive trends in their upcoming results. According to financial information provider FNGUIDE, the first-quarter operating profit consensus for this year is projected to increase by 68.46% and 24.11% year-on-year for HD Hyundai Electric and Hyosung Heavy Industries, respectively, at 27.8 billion won and 17.25 billion won, respectively. The power equipment industry has the characteristic that it takes 1 to 3 years to convert orders into sales, so considering that the large orders sustained so far are now being reflected in actual profits, there is a high possibility that the improvement trend in results will continue. In particular, all three companies are expected to be driven by the North American market, and following LS Electric, HD Hyundai Electric and Hyosung Heavy Industries are also expected to show growth in the North American market with sales increases of 61% and 52%, respectively. High dependence on the North American market is expected to serve as a major growth driver.