[E-Daily Reporter Shin Ha-yeon ] On the 24th, SKSecurities named LS ELECTRIC(010120)its top pick in the power equipment sector, noting that the company is expanding its business scope from distribution to transmission and transformers while also targeting the U.S. artificial intelligence (AI) data center and DC conversion markets. The firm maintained its “Buy” rating and target price of 310,000 won. This represents an upside potential of 65.8% compared to the closing price of 187,000 won on the 21st.

Na Min-sik, an analyst at SKSecurities, stated, “The strategic direction can be summarized in three key areas: expanding the product portfolio from the existing focus on distribution equipment to include transmission and transformers; entering the U.S. AI data center market; and securing a leading position in AC-to-DC conversion.”

LS ELECTRIC is expanding its product lineup to up to 525 kilovolts (kV) and securing channels with utilities and domestic mega-projects. At the same time, the company continues to secure orders for power distribution equipment from big tech firms and global fuel cell manufacturers.

Researcher Na explained, “I interpret the parallel expansion in Utah (distribution) and Busan, South Korea (ultra-high voltage) as the company betting on both channels simultaneously.”

The company is also seen as taking the lead in the DC market. Building on its portfolio of DC equipment—including semiconductor transformers (SST) and semiconductor circuit breakers (SSCB)—and its demonstration facilities at the Cheonan DC factory, the company signed a memorandum of understanding (MOU) with GE Vernova in July of last year to localize voltage-type high-voltage direct current (HVDC) converter valves.

Analyst Na described this as “a three-tier structure combining distribution (short-lead-time, high-turnover) and transmission (high-margin backlog) with DC (the next-generation standard).”

In particular, he deemed recent concerns about a slowdown in AI capital expenditures (CAPEX) to be excessive. While the high proportion of direct sales to Big Tech companies has acted as a factor discounting the company’s valuation amid AI CAPEX concerns, the analysis indicates that the actual order flow remains robust.

Analyst Na stated, “Based on the upward revision of the order guidance and the consecutive second-quarter orders for data centers, we judge that the stock market’s concerns are excessive.”

The primary reason SKSecurities named LS ELECTRIC as its top pick in the sector is the potential for rapid revenue growth. The lead time for its flagship product, power distribution panels, is approximately 10 months, meaning the period from order receipt to revenue recognition is relatively short.

Analyst Na explained, “Given the short cycle from order to revenue, demand can be quickly converted into revenue.”

He also highlighted the company’s exposure to numerous re-rating catalysts as a key investment point. As AI data centers, on-site power generation, and 800 VDC emerge as major topics in the power equipment market, LS ELECTRIC is developing DC conversion-related products—such as SSTs, SSCBs, Sidecars, and rectifiers—in addition to its existing distribution panels and circuit breakers.

Analyst Na emphasized, “We believe the company can simultaneously meet demand for both existing power distribution equipment and next-generation DC power infrastructure,” adding, “We assess that the company is in a high-growth phase, entering a leverage zone driven by expanding revenue volume.”