[Edaily Reporter PARK MIN ] NH INVESTMENT & SECURITIES announced on the 12th that it maintained its “Buy” investment rating for ILJIN ELECTRIC(103590), stating, “Further profitability improvements are expected in the second half of the year due to an expanded focus on North America,” but lowered its target price to 108,000 won. The target price reduction reflects the increase in the cost of equity resulting from rising interest rates.

Lee Min-jae, an analyst at NH INVESTMENT & SECURITIES, said in a report released that day, “Further improvements in profitability are expected to continue in the second half of the year as the company expands its presence in North America,” adding, “While projects outside North America are also showing solid profitability, the company is expected to continue benefiting from three major mega-projects underway in South Korea.”

According to NH INVESTMENT & SECURITIES, as of the second quarter, ILJIN ELECTRIC(103590)’s order backlog in the medium-voltage equipment division stood at $1.29 billion, with North America accounting for 77% of that total. Given that the lead time for the medium-voltage equipment division is more than 2.5 years, analysts estimate that if the current order intake continues, the company will have secured delivery volume through 2029.

ILJIN ELECTRIC announced in a regulatory filing the previous day that its consolidated revenue for the second quarter of this year was 637.4 billion won, a 21.9% increase year-over-year. Operating profit rose 91.4% to 72.0 billion won, with an operating profit margin of 11.3%. These figures exceeded NH INVESTMENT & SECURITIES’ previous estimates of 549 billion won in revenue and 54 billion won in operating profit. Compared to the market consensus, revenue and operating profit were 9.1% and 14.3% higher, respectively.

By business segment, the heavy electrical equipment division showed particularly strong growth. Revenue for this division reached 206.5 billion won, a 57.1% increase year-over-year, while operating profit surged 142% to 53.3 billion won. The operating profit margin stood at 25.8%, on par with that of competitors.

The wire and cable division also contributed to the improved performance. Second-quarter revenue for the wire and cable division reached 430.3 billion won, a 10.2% increase year-over-year, while operating profit rose 83% to 18.9 billion won. This was influenced by an 8.0 billion won reversal of provisions in the first half of the year and the impact of rising raw material prices. The order backlog for the wire and cable division stood at $649 million, reflecting an increase in ultra-high-voltage cable exports, particularly to North America and Europe.

NH INVESTMENT & SECURITIES forecasts this year’ ILJIN ELECTRIC(103590) ’s revenue at 2.296 trillion won and operating profit at 253 billion won. Compared to last year, this represents a 12.3% increase in revenue and a 67.5% increase in operating profit. The firm forecasts revenue of 2.288 trillion won and operating profit of 273 billion won for 2027, and revenue of 2.389 trillion won and operating profit of 299 billion won for 2028.

Analyst Lee Min-jae cited “increasing power demand driven by the replacement of aging power infrastructure in the U.S. and the growing construction of artificial intelligence (AI) data centers” and “rising demand for renewable energy due to the expanding decarbonization movement” as ILJIN ELECTRIC’s key growth drivers. However, he identified the Trump administration’s reduction of subsidies and support policies for renewable energy, as well as project order delays caused by high interest rates, as risk factors.