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Powernet, a company specializing in power supply units, is accelerating its transformation from a business structure focused on home appliances to becoming a power infrastructure provider for AI data centers. Although the company experienced a temporary downturn in performance in the first quarter of this year, expectations for a recovery are rising as the supply of new models to Samsung Electronics is set to expand and orders from new clients are expected to increase from the second quarter onward. Additionally, the PSU (Power Supply Unit) business for AI servers is emerging as a mid- to long-term growth driver, raising the possibility of a revaluation of the company’s value.

Lee Junseok, a researcher at Hanyang Securities, commented, “The first quarter was a transitional period impacted by the high base effect from early supply and a gap caused by model transitions. The strength of the performance recovery from the second quarter will be the key variable in achieving annual performance targets.”

According to consolidated financial statements, Powernet posted revenue of KRW 106.58 billion in the first quarter of this year, a 0.5% increase year-on-year, while operating profit was KRW 3.64 billion, down 17.6% from the same period last year. While the company maintained stable revenue, profitability weakened somewhat. The company explained that this was due to the high base burden from last year’s early supply effect, combined with a gap during the transition of some Samsung Electronics models and a simultaneous slowdown in downstream demand.

However, Hanyang Securities interprets this as a temporary adjustment phase. From the second quarter, with the application of new Samsung Electronics models and increased volumes from new large clients, a clear recovery trend is expected. Cost-saving initiatives and logistics cost controls are also expected to significantly improve profitability.

Lee stated, “Second-quarter revenue is expected to reach KRW 127.61 billion, up 9.4% year-on-year, recovering the company’s growth trajectory. Additional upside is anticipated depending on the early adoption of new CESCO products and four new B2C models.”

In the market, this year is being seen as the first year of Powernet’s structural improvement. This is because the company, which had previously maintained a stable revenue base centered around Samsung Electronics and Coway, is now rapidly diversifying its client portfolio. Currently, the company is expanding its supply base to major clients such as Kyungdong Navien, APR, Daiso, and CESCO. The key change is not only the increase in the number of clients, but also the rapid expansion of supplied product categories.

As Powernet expands its portfolio from a business centered on SMPS to include modules, battery packs, EMS, and B2C products, dependence on specific industries is decreasing while the foundation for recurring revenue is being strengthened. Accordingly, reliance on Samsung Electronics as a single client is expected to fall from the previous 70% level to 60% this year.

Lee assessed, “This year, the simultaneous expansion of high-margin products and diversification of products for new clients will highlight improvement in profitability rather than mere top-line growth.”

The market’s focus is especially on the PSU business for AI data centers. The rapid expansion of the AI industry is driving demand for GPU-based high-density racks, increasing the importance of data center power infrastructure. As rack power density is now more than five times higher than that of conventional servers, power efficiency and thermal management have become critical competitive factors. Accordingly, the PSU market has entered a phase of structural growth.

Powernet is developing 8-kilowatt-class PSUs and Power Shelves for AI servers, leveraging over 30 years of accumulated power supply design expertise. In particular, the company is recognized for its strong track record, supplying more than 90% of adapters to Samsung Electronics’ VD Division.

The Power Shelf is significant because it represents an expansion from supplying only standalone PSUs to providing rack-level power supply solutions. As the AI data center market evolves from individual components to integrated power infrastructure, this is being evaluated as a likely new growth engine.

Lee emphasized, “If the company’s core business growth increases earnings per share (EPS), the AI server PSU business is a new venture that could re-rate its valuation. If Powernet, previously seen as a supplier of SMPS to the home appliance and display sectors, is incorporated into the value chain for AI data center power infrastructure, it could become a key trigger for a medium- to long-term multiple expansion.”

The performance outlook is also positive. The securities industry sees Powernet’s operating profit this year reaching a record high of KRW 31.01 billion, up 26% from last year. Given the stable profitability of its existing business and the new growth option represented by AI server PSUs, there is a view that the current share price does not fully reflect the company’s intrinsic value.

Lee diagnosed, “The current share price is in an undervalued range, not fully reflecting the company’s core business strength and the potential of its AI server PSU business.”

This content was produced with the assistance of AI translation services.