[Edaily Reporter PARK MIN ] On the 23rd, SKSecurities analyzed that while SANIL ELECTRIC’s third-quarter earnings would slightly fall short of market expectations due to temporary factors such as a weakening exchange rate and typhoons, strong order intake would continue in the medium to long term thanks to spillover benefits from U.S. and European Union (EU) regulations on Chinese-made inverters. However, reflecting recent valuation adjustments in the domestic and international power equipment sectors, the firm lowered its target price by 12.5% from 320,000 won to 280,000 won, while maintaining its “Buy” investment rating.

Na Min-sik, an analyst at SKSecurities, estimated in a report released today that “SANIL ELECTRIC’s third-quarter consolidated revenue will increase 27.1% year-over-year to 168.7 billion won, and operating profit will rise 45.3% to 62.0 billion won (operating margin of 36.8%), slightly missing the consensus estimates (revenue of 175.3 billion won, operating profit of 65.8 billion won).”

He cited the decline in the won-dollar exchange rate and shipping delays caused by typhoons as the reasons for the slowdown in earnings. Analyst Na noted, “SANIL ELECTRIC’s export share reached 97% in the first half of this year and its currency hedging ratio stood at around 50%, the impact of the falling exchange rate was inevitable.” However, he added, “The shipments delayed by the typhoon are expected to be recognized normally as fourth-quarter revenue, and new orders—centered on the renewable energy sector—are projected to increase compared to the previous quarter, reaching a record high for any single quarter.”

SKSecurities predicted that the restructuring of supply chains in the U.S. and Europe would serve as a strong catalyst for SANIL ELECTRIC’s order intake. This is due to the U.S. intensifying restrictions on Chinese products, as evidenced by the Federal Communications Commission’s (FCC) certification restrictions on foreign-made inverters and the executive order on bulk power system security issued in July and August.

Researcher Na stated, “Chinese companies hold more than 50% of the U.S. industrial inverter market, and over 70% of demand comes from renewable energy and energy storage systems (ESS),” adding, “If Chinese products are excluded, the market share of Sanil Electric’s clients, such as TMEIC and GE Vernova, could expand significantly.” In fact, SANIL ELECTRIC secured consecutive orders in August for solar inverter reactors worth 51.2 billion won from TMEIC USA, followed by an order in October for transformers for battery energy storage systems (BESS) destined for U.S. data centers, valued at 35.1 billion won.

In particular, the company assessed that its market competitiveness remains strong despite the noise surrounding the data center sector. Analyst Na said, “We secured additional orders from Bloom Energy in the third quarter, and discussions on specifications and quotes with potential clients are proceeding as planned,” adding “Considering the combined production capacity of 1 trillion won across Plants 1 and 2, the expansion on the unused land at Plant 2, and Plant 3 (ultra-high-voltage transformers, up to 200 billion won), which is scheduled to begin operations in 2028, we have ample capacity to handle the surge in orders,” he explained.