[Click e-Stock] "Proven by Performance and Capacity"... The Most Undervalued Power Equipment Stock

Mirae Asset Securities has raised its target price for Iljin Electric from 95,000 won to 114,000 won, while maintaining a "Buy" investment rating.

On August 13, Kim Tae-hyung, research analyst at Mirae Asset Securities, stated, "We have raised our 2028 earnings per share (EPS) estimate from 4,537 won to 4,769 won, reflecting improved profit margins due to a continued increase in U.S.-bound revenue portion and additional production capacity."

He added, "Iljin Electric's 2028 price-to-earnings ratio (PER) is at 12.9 times, which is the lowest among industry peers. As this quarter's results have eliminated concerns about growth, the current valuation level provides a buying opportunity."

The company's revenue for the second quarter of this year was 637.4 billion won, up 21.9% from the same period last year. Operating profit rose 91.4% year-on-year to 72 billion won for the same period. Revenue exceeded the consensus by 9.5%, and operating profit outperformed consensus expectations by 30.1%. Analyst Kim explained, "The heavy electric division, where transformers and circuit breakers are the main products, saw significant revenue growth. To meet delivery deadlines, the company increased production line utilization, resulting in higher revenue."

He further added, "With the rising proportion of U.S.-bound revenue, the profit margin has reached a record high, with the heavy electric division recording an operating margin of 25.8%."

As the share of U.S.-bound sales increases, further improvements in margins are also expected. Currently, the North American sales portion is about 30%, which is lower than domestic peers. However, in terms of backlog orders, the overseas portion has increased from 50% in 2021 to 80% this year. Kim noted, "Given that it takes three years from order to revenue recognition, North American sales are expected to continue expanding."

He also explained, "Iljin Electric’s passive capacity expansion plans have been a factor in valuation discounts; however, this quarter the company has demonstrated revenue growth potential through overcapacity without additional expansion. This is a positive factor, as it shows that additional revenue can be secured with current production capabilities."

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