"More Data Centers, More Profits" LS ELECTRIC Target Price Raised [Click eStock]

Raised Target Price from 194,000 Won to 230,000 Won

BNK Securities has raised its target price for LS ELECTRIC from 194,000 won to 230,000 won, while maintaining its 'buy' investment rating.

On April 23, Lee Sang-hyun, a researcher at BNK Securities, stated, "The key investment point is that the global power cycle has shifted from transmission to the 'distribution cycle,' which is LS ELECTRIC's main business area, leading to the start of structural growth." He added, "In particular, contracts with big tech companies for data centers are evolving from simple one-off deals to mid-term fixed contracts and package forms. Given the short replacement cycle of distribution products, a highly attractive structure of high-margin recurring sales, which are directly reflected in annual revenue, has been established."

He further explained, "Although the reported operating margin came in at 9.2%, primarily due to one-off personnel expenses—such as long-term incentive pay linked to the sharp rise in share price—amounting to around the mid-10 billion won range, mainly reflected in the power equipment segment, the adjusted operating margin excluding these one-off costs exceeded 10% for the first time ever."

LS ELECTRIC posted strong first-quarter results this year. Revenue came in at 1.3766 trillion won, up 33% year-on-year, and operating profit expanded by 45% to 126.6 billion won, aligning with market expectations for operating profit. Lee attributed the earnings growth primarily to a significant increase in facility investment in data centers, semiconductors, and renewable energy in both the U.S. and domestic markets, which drove robust performance in the company's core power business.

He especially highlighted the large-scale orders from U.S. big tech companies. "LS ELECTRIC signed data center contracts with major U.S. big tech companies worth approximately 170 billion won, and this represents a meaningful achievement with an operating margin in the mid-to-high 10% range," he assessed.

Lee also saw the successful entry into the DC (direct current) power grid market as a notable achievement for LS ELECTRIC this quarter. "With the expansion of renewable energy and data centers, there is growing demand for a transition from AC (alternating current) to DC (direct current). LS ELECTRIC has secured DC equipment supply references from U.S. on-site power generation customers, demonstrating its technological strength in the next-generation power grid market," he said.

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