[Edaily Reporter kyoungeun kim ] HANWHA INVESTMENT & SECURITIES announced on the 20th that it has initiated coverage of the power equipment and wind power sectors with an “Overweight (Positive)” investment rating, naming HYOSUNG HEAVY INDUSTRIES(298040)as its top pick in the power equipment sector.
Kim Ye-in, an analyst at HANWHA INVESTMENT & SECURITIES, stated in a report released that day, “We are now truly in the ‘Age of Electricity.’ As AI data centers and high-tech industrial complexes rely on electricity as their core energy source, power has emerged as a strategic asset directly linked to a nation’s industrial competitiveness,” she explained. “The most urgent bottleneck is the power grid: at the transmission stage, there is a shortage of key equipment such as ultra-high-voltage transformers and circuit breakers, while at the distribution stage, demand for distribution panels and distribution transformers—needed to handle large new loads like data centers—is rapidly increasing.”
He continued, “As increased capital expenditures (CAPEX) on transmission grid infrastructure by North American utilities and investments in data center power infrastructure by Big Tech companies simultaneously drive demand, the scope of business for domestic companies is expanding in both the transmission and distribution sectors.”
Researcher Kim said, “The market for ultra-high-voltage transformers and circuit breakers used in the transmission sector remains a supplier-dominated market with persistent supply shortages. High order visibility is being maintained as expanded investment by U.S. utilities aligns with demand for securing equipment with long lead times in advance.” He added, “Orders for ultra-high-voltage products destined for North America, which have expanded since 2023, are set to begin generating revenue in earnest starting in 2026.” Regarding the power distribution sector, he added, “The market for power distribution equipment—such as distribution panels, circuit breakers, and medium- and low-voltage transformers—is opening up due to increased industrial power demand driven by data centers and reshoring.”
The three power equipment companies under coverage are expected to grow based on their distinct product portfolios and customer bases. HYOSUNG HEAVY INDUSTRIES(298040)continues to see earnings improvement centered on high-margin products, driven by expanded exposure to the North American ultra-high-voltage market, while HD HYUNDAI ELECTRIC(267260)is broadening its scope to include data center power distribution in addition to ultra-high-voltage products. LS ELECTRIC(010120)has established a structure capable of relatively rapid revenue conversion by expanding its base of North American industrial and data center customers in the power distribution equipment and switchgear sectors.
For HYOSUNG HEAVY INDUSTRIES, our top pick, we have issued a “Buy” (New) investment rating with a target price of 4.5 million won. This represents a 55% upside potential compared to the closing price on the 19th (2.908 million won). The target price was calculated by applying a target price-to-earnings (P/E) ratio of 32x to the estimated earnings per share (EPS) of 123,542 won for 2027. Analyst Kim explained, “Within the sector, we favor companies that maintain high EPS growth rates while facing relatively low valuation pressures, and we designate HYOSUNG HEAVY INDUSTRIES as our top pick.” He added, “Based on its high exposure to the North American ultra-high-voltage market, the company is directly benefiting from the structural advantages of a supplier-dominated market, and EPS growth is expected to continue as revenue is recognized from its high-margin order backlog.”
The firm initiated coverage on HD HYUNDAI ELECTRIC with a target price of 1 million won (33% upside potential) and on LS ELECTRIC with a target price of 260,000 won (29% upside potential).