[Edaily Reporter Kim Hyung-il ] SKSecurities highlighted the growth potential of HYOSUNG HEAVY INDUSTRIES(298040)’s U.S. power grid business, noting that the customer base of its U.S. sales subsidiary is expanding from a focus on utilities to include customers related to artificial intelligence (AI) data centers. The firm maintained its “Buy (BUY)” investment rating and a target price of 4 million won.

On the 24th, Na Min-sik, an analyst at SKSecurities, stated, “The composition of the U.S. subsidiary’s end customers is changing,” and analyzed, “It is a structure where investments in utilities and power grids determine profit visibility, with the AI data center channel layered on top of that.”

The major revenue sources for HICO America, the U.S. sales subsidiary, are U.S. companies Constellation (15%), Intersect Power (13%), Dominion (9%), PSE (8%), AEP (8%), LS Power (5%), Southern (4%), xAI (3%), and the Japanese company SoftBank (9%). Based on end customers served by the Memphis production facility, Eversource accounted for 22%, AEP for 17%, and Intersect Power for 15%.

Researcher Na explained, “While utility companies form the core, customers such as SoftBank that supply AI data centers have also made the list.”

HYOSUNG HEAVY INDUSTRIES’ business strategy is assessed as focusing on strengthening its competitiveness in the power transmission sector in the U.S. rather than expanding its product portfolio. The strategy centers on combining local production in the U.S. with the Quanta joint venture (JV), focusing on 765 kV transformers and 800 kV gas-insulated circuit breakers (GCBs).

Analyst Na explained, “The company will become the only South Korean firm capable of offering bundled solutions for transformers and ultra-high-voltage circuit breakers in the U.S.,” adding, “The Memphis plant in the U.S. is the only facility capable of manufacturing 765kV equipment and holds references for approximately 50% of cumulative installations.”

He also highlighted the company’s February signing of a contract worth approximately 787 billion won with a major U.S. transmission system operator to supply power equipment, including 765 kV ultra-high-voltage transformers and reactors. The contract period runs from February 2026 to January 2031.

Researcher Na said, “Since Quanta Service stated during its earnings call that the 765kV transmission grid project is being reflected in its order backlog, we believe there is a high likelihood of securing follow-up orders.”

Key points to watch going forward include: △announcements of follow-up orders for 765kV and 800kV GCBs; △the commencement of shipments to the U.S. of large transformers subject to anti-dumping duties in the second half of the year and the maintenance of the heavy industry operating profit margin (OPM); △the timing of the reversal of deferred Middle Eastern orders and inventory gains during transit; and △the outline of orders for High-Voltage Direct Current (HVDC) transmission for the domestic Energy Highway project.

He also noted that the order backlog is becoming increasingly long-term. Analyst Na said, “Amid ongoing policies that maintain an average lead time of 2–3 years in the power equipment industry, the company is securing orders for projects with delivery dates extending beyond 2030, with 765kV orders spread out through 2028 to early 2031,” and “As CAPEX discussions among U.S. utilities are expected to continue beyond 2030, the company’s order backlog is entering a phase where its time horizon is lengthening.”