Daishin Securities reported on November 2 that Hyosung Heavy Industries' third-quarter performance fell short of market expectations, but it anticipates a recovery starting in the fourth quarter. The firm expects an increase in orders due to expanded investments in the U.S. high-voltage transmission network. While maintaining a 'buy' rating, Daishin lowered its target price from 4 million won to 3 million won, a 25% decrease.
Heo Min-ho, a researcher at Daishin Securities, stated, "The third-quarter results were below market expectations due to temporary factors, but the overall industry trend remains positive. We expect Hyosung to emerge from its undervalued phase once regulatory uncertainties in the U.S. power grid are resolved."
Hyosung Heavy Industries reported third-quarter sales of 1.741 trillion won, a 7.2% increase from the same period last year. Operating profit rose by 10.8% to 243.5 billion won, but fell short of the market forecast of 306 billion won.
The underperformance was attributed to delays in the delivery of some high-margin power equipment and the occurrence of one-time costs. Delays in supplying gas-insulated switchgear (GIS) to U.S. nuclear power operators due to typhoon impacts, logistical disruptions from Middle Eastern instability, and delays in civil engineering preparations in the UK also affected results. Provisions made in the construction sector were cited as another factor that lowered profitability.
Daishin Securities forecasts that fourth-quarter sales will increase by 32% year-on-year to 2.301 trillion won, with operating profit expected to rise by 55% to 403.4 billion won. This projection includes revenue from delayed sales to the U.S. and the UK in the third quarter, as well as the anticipated ramp-up of gas circuit breaker (GCB) supply from a joint venture established with Quanta Services in the U.S.
The expansion of investments in the U.S. high-voltage transmission network is also seen as a long-term growth factor. Since last year, Hyosung Heavy Industries has secured over 1.8 trillion won in orders for 765-kilovolt (kV) power equipment. The total project cost for transmission network projects being pursued by major U.S. power grid operators is estimated to be between $116 billion and $134 billion.
Heo noted, "Hyosung Heavy Industries has a factory for 765 kV transformers in the U.S. and is expanding its product offerings to include high-voltage circuit breakers, shunt reactors, and STATCOMs. We expect continued market share growth focused on high-margin products through the expansion of domestic and international production facilities."
Heo Min-ho, a researcher at Daishin Securities, stated, "The third-quarter results were below market expectations due to temporary factors, but the overall industry trend remains positive. We expect Hyosung to emerge from its undervalued phase once regulatory uncertainties in the U.S. power grid are resolved."
Hyosung Heavy Industries reported third-quarter sales of 1.741 trillion won, a 7.2% increase from the same period last year. Operating profit rose by 10.8% to 243.5 billion won, but fell short of the market forecast of 306 billion won.
The underperformance was attributed to delays in the delivery of some high-margin power equipment and the occurrence of one-time costs. Delays in supplying gas-insulated switchgear (GIS) to U.S. nuclear power operators due to typhoon impacts, logistical disruptions from Middle Eastern instability, and delays in civil engineering preparations in the UK also affected results. Provisions made in the construction sector were cited as another factor that lowered profitability.
Daishin Securities forecasts that fourth-quarter sales will increase by 32% year-on-year to 2.301 trillion won, with operating profit expected to rise by 55% to 403.4 billion won. This projection includes revenue from delayed sales to the U.S. and the UK in the third quarter, as well as the anticipated ramp-up of gas circuit breaker (GCB) supply from a joint venture established with Quanta Services in the U.S.
The expansion of investments in the U.S. high-voltage transmission network is also seen as a long-term growth factor. Since last year, Hyosung Heavy Industries has secured over 1.8 trillion won in orders for 765-kilovolt (kV) power equipment. The total project cost for transmission network projects being pursued by major U.S. power grid operators is estimated to be between $116 billion and $134 billion.
Heo noted, "Hyosung Heavy Industries has a factory for 765 kV transformers in the U.S. and is expanding its product offerings to include high-voltage circuit breakers, shunt reactors, and STATCOMs. We expect continued market share growth focused on high-margin products through the expansion of domestic and international production facilities."
* This article has been translated by AI.
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