[Edaily Marketin LEE GEON-EOM Reporter] LS(006260), the holding company of LS Group, has increased the likelihood of an upgrade to its own credit rating, driven by across-the-board improvements in the creditworthiness of its core subsidiaries.

Korea Ratings (Han Shin Pyeong) announced on the 30th that it has maintained the credit rating of LS Co., Ltd. (hereinafter “LS”)’s unsecured bonds at “A+” and changed the rating outlook from “Stable” to “Positive.” Analysts attribute the holding company’s upgraded outlook to the simultaneous turnaround in the performance and creditworthiness of its subsidiaries, driven by an unprecedented boom in the power infrastructure market—including power cables and electrical equipment.

LS’s creditworthiness is underpinned by the fundamentals of its core subsidiaries—including LS Cable, LS Electric, and LSMnM—which support the group’s power infrastructure value chain. The valuations of these subsidiaries have surged recently, driven by a combination of expanding global power grid investments and a boom in data center construction by major North American tech companies.

In fact, LS Cable (A+/Positive), South Korea’s leading comprehensive wire and cable manufacturer, saw its rating outlook upgraded this month as it expanded its order backlog—centered on high-value-added products such as submarine cables—and boosted its profit-generating capacity. LS Electric (AA-/Positive), which holds an oligopolistic position in the domestic market, also saw its rating outlook upgraded last year as its revenue grew rapidly with the full-scale launch of shipments to North American data centers. LSMnM (A1), South Korea’s only dedicated electrolytic copper smelter, is also posting solid earnings, buoyed by rising prices for raw materials and sulfuric acid.

Kim Kyu-wan, an analyst at Hanshin Rating, stated, “LS Group affiliates are solidifying their dominant or firmly leading market positions across the entire power infrastructure value chain—spanning cables, power equipment, and copper smelting,” he said. “Amid the explosive growth of Chonbang industries, the proportion of sales from high-value-added products has expanded, leading to a noticeable improvement in the creditworthiness of core subsidiaries compared to the past. This, in turn, is creating a virtuous cycle that further strengthens the holding company’s business portfolio.”

LS’s debt level has increased compared to the past due to the expansion of its subsidiaries, which has led to continued working capital requirements and large-scale capital expenditures (CAPEX) across the group. However, given the cash-generating capacity and solid market dominance of its subsidiaries, the debt burden is assessed to be well within manageable limits.

The holding company’s own financial structure also remains robust. LS generates stable dividend income annually based on its strong control over its subsidiaries. It secures recurring cash flow through brand royalties and service fees linked to the sales volume of its affiliates. As of the end of March this year, the book value of LS’s holdings in its affiliates amounted to approximately 6 trillion won.

Analyst Kim explained, “Given the cash flow structure that relies on dividends from core subsidiaries, there is a structural subordination of the holding company’s debt,” but added, “However, the company is maintaining stable financial strength as dividends and brand royalties are steadily flowing in from subsidiaries with solid business foundations.”

He continued, “Considering the substantial asset value of its holdings in affiliated companies, the group’s excellent external creditworthiness, and its smooth access to capital markets as a listed company, the holding company’s financial flexibility is at a very high level,” and predicted, “Even if some non-recurring funding needs arise, they can be adequately managed using its own financial buffers.”

Han Shin Rating plans to observe whether the core affiliates’ earnings growth will continue, driven by favorable conditions in the power infrastructure sector, while closely monitoring trends in non-recurring funding needs—such as financial support for subsidiaries or equity expansions—to determine whether to reflect these factors in the credit rating.