IBK Securities has forecasted continued solid performance growth for Hyosung Heavy Industries, maintaining a target price of 4.9 million won and a 'buy' rating.
Kim Tae-hyun, a researcher at IBK Securities, projected that Hyosung Heavy Industries will report consolidated revenues of 1.9091 trillion won and an operating profit of 324.5 billion won for the second quarter of this year, marking increases of 25.2% and 97.6%, respectively, compared to the same period last year. These figures exceed the market consensus of 1.8172 trillion won in revenue and 287.6 billion won in operating profit.
Kim noted, "The industrial sector will reflect deferred volumes from the first quarter, while the construction sector will benefit from a base effect following last year's poor performance, leading to a robust performance trend."
In the industrial sector, revenues are expected to reach 1.3667 trillion won, with an operating profit of 302 billion won. Some high-margin products, such as circuit breakers for the U.S. market, were recognized as inventory during transport in the first quarter, which affected performance. However, these volumes are anticipated to contribute approximately 100 billion won to revenue and about 40 billion won to operating profit in the second quarter. Although the order environment remains favorable, new orders may decrease compared to the first quarter, which saw large orders totaling 4.2 trillion won.
The construction sector is also expected to show improvement, with projected revenues of 542.4 billion won and an operating profit of 22.5 billion won, indicating a return to profitability. The uncertainty surrounding the recovery of receivables from unsold officetels in Busan last year, which led to a provision of about 24 billion won, is expected to be resolved, significantly enhancing profitability.
Kim highlighted solid state transformers (SST) as a key long-term growth driver for Hyosung Heavy Industries. He explained that the demand for next-generation transformers, which can control power flow and quality, is increasing due to the expansion of AI data centers and direct current (DC) power networks.
He stated, "Hyosung Heavy Industries completed the development of a 22.9 kV solid state transformer in 2022 and is currently conducting a demonstration project for power supply to data centers. Although it is still in the early stages of the business and its contribution to actual revenue is limited, gradual results are expected to become visible after next year as the related market expands."
* This article has been translated by AI.
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