Iljin Electric's stock surged over 15% during trading after the company reported record earnings for the second quarter of this year. Analysts expect continued profitability improvements driven by expanding overseas sales, particularly in the United States, although opinions on price targets vary.
As of 11:08 a.m. on August 12, Iljin Electric shares were trading at 71,800 won, up 10,000 won (16.18%) from the previous day. At one point, the stock reached 74,400 won, reflecting strong market performance.
On August 11, Iljin Electric announced that its operating profit for the second quarter reached 72 billion won, a 91.4% increase compared to the same period last year. Revenue for the same period was 637.4 billion won, up 21.9%. Both revenue and operating profit are the highest recorded for a second quarter.
The company's power equipment segment saw revenue of 206.5 billion won, a 57% increase year-on-year, with operating profit rising 142% to 53.3 billion won. The profit margin for this segment improved to 25.8%, bolstered by increased sales to the U.S. The backlog for the power equipment segment stood at $1.29 billion, with 77% of that coming from North America.
In the wire segment, second-quarter revenue was 430.3 billion won, a 10% increase from the previous year, while operating profit rose 83% to 18.9 billion won. For the first half of the year, sales of high-voltage transformers reached 251.8 billion won, with North America accounting for about 40% of that total.
Iljin Electric also achieved record results for the first half of the year, with total revenue of 1.1435 trillion won and operating profit of 122.7 billion won.
Analysts predict that Iljin Electric's earnings growth will continue in the second half of the year, although there are differing views on price target adjustments.
Mirae Asset Securities raised its price target for Iljin Electric from 95,000 won to 114,000 won, an increase of 20.0%, while maintaining a 'buy' rating.
Kim Tae-hyung, a researcher at Mirae Asset Securities, stated, "We expect further profit margin improvements due to the increased share of sales to the U.S. Considering that it typically takes about three years from order to revenue recognition, the share of North American sales will continue to grow until the 2029 orders are fully shipped."
Concerns about production capacity have eased somewhat. Iljin Electric increased its second-quarter revenue by operating its production lines above capacity without additional expansions. The production line utilization rate for the first half of the year was 108%. Kim noted, "The ability to secure additional revenue without capital expenditure (Capex) burdens is a positive factor for profitability."
Conversely, NH Investment & Securities maintained a 'buy' rating but lowered its price target from 118,000 won to 108,000 won, a decrease of 8.5%. This adjustment reflects the rising cost of equity due to interest rate increases, though it does not indicate a negative outlook on earnings.
Lee Min-jae, a researcher at NH Investment & Securities, commented, "We expect continued profit margin improvements in the second half due to the increased share of North American sales. Additionally, profitability from projects outside North America remains strong, and we anticipate benefits from three major mega projects underway in South Korea."
* This article has been translated by AI.
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