[Edaily Reporter KIM YOON-JEONG ] Yuanta Securities Korea assessed that HD HYUNDAI ELECTRIC(267260)posted second-quarter earnings in line with market expectations and that its data center business will serve as a key growth driver for future medium- to long-term performance. The firm maintained its “Buy” rating but lowered the target price from 1.45 million won to 1.165 million won.

On the 29th, Son Hyun-jung, an analyst at Yuanta Securities Korea, stated, “The effect of tariff refunds amounted to only about 6 billion won; therefore, we believe profit growth was driven more by improvements in core business pricing and product mix than by one-time factors.”
HD HYUNDAI ELECTRIC’s second-quarter consolidated revenue reached 1.1418 trillion won, up 26.0% year-over-year and 10.2% quarter-over-quarter. Operating profit stood at 287 billion won, an increase of 37.3% year-over-year and 11.1% quarter-over-quarter. The operating profit margin (OPM) was 25.1%, in line with market consensus.
Revenue from power equipment totaled 535.9 billion won. Although revenue decreased quarter-over-quarter due to the impact of transformer delivery schedules for North America, profitability for power transformers in North America, Europe, and the Middle East continued to improve. Yuanta Securities Korea analyzed that profitability for new orders in North America also improved, reflecting an increased share of high-voltage products—such as 765 kilovolt (kV) models—and higher contract unit prices.
Revenue from power distribution equipment rose to 231.2 billion won, up 20.2% year-over-year and 70.1% quarter-over-quarter, driven by expanded domestic shipments of power distribution equipment to the semiconductor sector and approximately 20 billion won in revenue from Anju Battery Energy Storage Systems (BESS).
New orders in the second quarter totaled $1.44 billion, a 44.6% increase year-over-year. Of this total, orders from North America amounted to $853 million, accounting for 59.2% of the total. New orders in North America for the first half of the year totaled $2.168 billion, effectively matching last year’s full-year order volume in just six months. As of the end of the second quarter, the order backlog stood at $8.49 billion, up 29.6% year-over-year and 7.6% quarter-over-quarter.
Yuanta Securities Korea assessed that the key takeaway from this earnings announcement is that the data center business has solidified its position as a medium- to long-term growth driver.
Analyst Son stated, “The long-term supply contract for power and distribution transformers worth approximately 1.1 trillion won signed with Big Tech Company A will be reflected in revenue for 2027–2028, and negotiations are underway for additional volumes in 2029–2030 that exceed the scope of the existing contract,” adding “We are also pursuing long-term package supply contracts with three global Big Tech companies, so we expect to secure additional new orders,” he explained.
He continued, “We believe that the expansion of data center orders will increase the order size per customer and the duration of earnings contribution, while broadening our growth base to encompass the entire power equipment sector. This is expected to enhance earnings visibility and valuation starting in 2027.”
Regarding the target price reduction, Analyst Son stated, “The decision to lower the applied multiple from the previous P/E ratio of 31.5x reflects the recent valuation adjustment across the broader stock market, not a change in fundamentals,” and “Considering the expansion of the order backlog in North America, the conversion of high-priced orders into revenue, the revenue recognition and capacity expansion effects of the 765 kilovolt (kV) project starting in 2027, and the data center package orders, the medium- to long-term earnings per share (EPS) growth trajectory remains valid. Although the stock price has fallen sharply alongside the market correction, there has been no change in earnings or order visibility,” he said.