LS Electric posts record high earnings on rising demand in U.S.

[Courtesy of LS Electric]

LS Electric Co., a major power equipment manufacturer in South Korea, has achieved its highest-ever performance since its founding, as the growing number of battery, semiconductor, and electric vehicle production plants in North America is driving demand for power infrastructure. LS Electric shares closed 25.14 percent higher on Tuesday. Other LS Group companies rallied in tandem, with LS and LS Networks both reaching their daily limit high.

LS Electric announced on Tuesday its pro-forma revenue for the second quarter was 1.2 trillion won ($940 million) with an operating profit of 104.9 billion won. Both revenue and operating profit marked all-time high records for the quarter. Compared to a year earlier, revenue grew by 37 percent, and operating profit jumped 75 percent.

LS Electric’s stock experienced growth this year, more than doubling to 115,500 won. The company’s status as a beneficiary of the U.S. Inflation Reduction Act (IRA) and Ukraine’s potential reconstruction has played a pivotal role in this surge.

“The implementation of the U.S. IRA and CHIPS Act has resulted in a surge in demand for power equipment, fueled by factory expansions across the country. With infrastructure investments on the rise, this high-demand environment is expected to persist in the near future,” said Na Min-sik, an analyst at SK Securities.

In light of the favorable business environment and strong performance, analysts believe that LS Electric’s stock remains an attractive investment opportunity.

“With a strong operating environment, the stock has seen a surge this year, but based on projected earnings for 2023 and 2024, the price-earnings ratio (PER) is still attractive at 11 times and 9 times, respectively,” said Ahn Joo-won, an analyst at DS Investment & Securities, recommending a “buy” rating with a target price of 140,000 won. “Considering the expected strong performance in the second half of the year, a buying investment strategy remains effective.”