[Click e-Stock] ILJIN Electric Expected to Benefit from Expanded Investment in Power Infrastructure

Mirae Asset Securities maintained its "Buy" rating and target price of 114,000 won for ILJIN Electric on Oct. 8, citing expected benefits from the recent expansion of domestic investment in power infrastructure.

"ILJIN Electric is expected to post third-quarter revenue of 612.9 billion won, up 36.1% year over year, and operating profit of 62.9 billion won, up 78.1%," said Kim Taehyung, a researcher at Mirae Asset Securities. "Third-quarter results are expected to ease slightly from the previous quarter, following strong results driven by the additional operation of heavy electrical equipment production lines and the reversal of one-off provisions in the wire and cable division in the prior quarter. However, the direction of earnings improvement remains solid."

"The wire and cable division secured about 271.6 billion won in orders for projects in Europe in the third quarter, as copper prices continued to rise, setting a record for quarterly orders," Kim said. "The heavy electrical equipment division is also continuing to operate at maximum capacity, and profitability is expected to keep expanding as its product mix improves, supported by a high share of overseas orders in its backlog."

"In its revised outlook for the 12th Basic Plan for Electricity Supply and Demand, the government raised its forecast for peak electricity consumption in 2040 by about 28% from its previous estimate," he said. "Domestic demand for new transformers is also expected to surge, starting in 2028, when power demand from semiconductor plants and data centers begins to ramp up."

He added, "ILJIN Electric has secured orders for extra-high-voltage transformers with delivery schedules extending through 2029, enabling it to respond in a timely manner to increased investment in power infrastructure, thanks to shorter lead times than its competitors."

"With revisions to the Special Act on the Expansion of the National Power Grid allowing private-sector companies to invest in power grids, both the volume and pace of orders are expected to increase. This is also expected to normalize selling prices, which had been depressed under a procurement structure centered on Korea Electric Power Corporation, and improve margins," he said. "An increase in domestic shipments will drive profitability improvements going forward."

"The third quarter should be viewed as a normalization following one-off strong results in the previous quarter, while the company's medium- to long-term earnings capacity continues to improve," Kim added. "The stock currently trades at a price-to-earnings ratio (PER) of 18.9 times based on estimated 2028 earnings per share (EPS), making it undervalued compared with the global power equipment peer group, which trades at 27.0 times."

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