LS to Benefit from Power Infrastructure and Multiple Listing Regulations [Click e-Stock]

iM Securities Raises Target Price from 250,000 Won to 570,000 Won

On June 23, iM Securities maintained its "Buy" investment rating on LS and raised its target price from 250,000 won to 570,000 won.

Lee Sangheon, a researcher at iM Securities, stated, "With the rapid increase in electricity demand driven by the expansion of artificial intelligence (AI) and the construction of new data centers, LS is expected to benefit as it has a comprehensive value chain in the power infrastructure sector, spanning from copper production to power transmission, transformation, and distribution."

According to Lee, LS Cable's order intake is expanding. As of the end of each year on a standalone basis, LS Cable's order backlog increased from 2.8 trillion won in 2022 to 7.5 trillion won in the first quarter of this year. In the power transmission segment, performance is improving due to selective orders focusing on high-value-added extra-high-voltage projects, while in the power distribution segment, orders for items such as bus ducts are expected to rise as they are core components for supplying power to AI data centers.

Lee also mentioned that the price of copper is showing a super-strong trend, hovering above 13,000 dollars per ton, which is expected to benefit LS. He explained, "Most of LS's subsidiaries have a very high correlation with copper prices in terms of business structure. For companies such as LS Cable and LS I&D, product prices are linked to copper prices to a certain extent, so the rise in copper prices is expected to become a visible driver for future earnings improvement, thereby benefiting the company."

LS is also expected to benefit from the enforcement of regulations that in principle prohibit multiple listings. Lee explained, "As a holding company, the unavoidable liquidity discount caused by multiple listings of both the holding company and its subsidiaries has deepened, due to the high potential for inherent conflicts of interest between holding company shareholders and subsidiary shareholders. The introduction of the new regulation will alleviate concerns over such conflicts of interest between shareholders, leading to a structural reduction in the discount rate and a re-rating of the company's valuation, which is expected to benefit LS."

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