Korean power equipment stocks are rallying on expectations of rising demand from U.S. artificial intelligence (AI) data center expansion and aging power grid replacements. Hyosung Heavy Industries (298040.KS), Korea's highest-priced "emperor stock" (shares trading above 1 million won each), surpassed 3.5 million won per share.
According to the Korea Exchange, Hyosung Heavy Industries shares were trading at 3.521 million won ($2,460) as of 11:11 a.m. Thursday, up 7.74 percent from the previous session. The stock traded below 2 million won at the end of last year but has surged sharply this year on expectations of improved earnings at power equipment makers.
HD Hyundai Electric (267260.KS) was also trading 11.6 percent higher at 1.26 million won. The stock hit a new high of 1.299 million won during the session. LS ELECTRIC (010120.KS) rose 5.99 percent, setting new highs for a third consecutive trading day.
The rally in power stocks comes as the first-quarter earnings season highlights greater profit visibility from AI infrastructure expansion and U.S. aging power grid replacements. GE Vernova, the world's largest power infrastructure company, reported Tuesday (local time) that first-quarter revenue reached $9.34 billion, an earnings surprise that significantly exceeded the market consensus of $9.19 billion to $9.26 billion.
Korea's three major power equipment makers are also reportedly seeing a sharp increase in orders for transformers and switchgear from major North American customers. Hyosung Heavy Industries and HD Hyundai Electric have technological strength in ultra-high voltage transformers, while LS ELECTRIC has specialized competitiveness in switchgear.
"The 765kV ultra-high voltage transformer segment is expected to see full-scale orders this year, and these are high-value-added orders that bring not only volume growth but also higher average selling prices (ASP)," said Son Hyun-jung, a researcher at Yuanta Securities (003470.KS). "An expanding share of such orders is expected to serve as a factor that takes the company's overall profitability to the next level."
Son emphasized, "As power grid investment expansion converges with rising data center electricity demand, ultra-high voltage-centered demand continues to expand. Accordingly, the order backlog is improving not only quantitatively but also qualitatively."
