Securities firms are successively raising their target prices for Hyosung Heavy Industries (298040.KS), heightening expectations for strong earnings performance.
LS Securities on Thursday maintained its "buy" rating on Hyosung Heavy Industries while raising its target price from 3.5 million won to 4.1 million won. "The company's growth-focused fundamentals are overwhelmingly superior compared to global competitors, and favorable conditions continue in key markets including the United States and Korea," said Seong Jong-hwa, a researcher at LS Securities. "Given the aggressive capacity expansion, a multiple premium is justified."
SK Securities also raised its target price from 3 million won to 3.6 million won on the same day while maintaining its "buy" rating. Hyosung Heavy Industries shares closed at 2.86 million won on Wednesday, the previous trading day.
Both securities firms forecast significant year-on-year growth in first-quarter earnings. LS Securities projected revenue of 1.3058 trillion won (up 21%) and operating profit of 177.6 billion won (up 73%), while SK Securities estimated revenue of 1.4058 trillion won (up 30.6%) and operating profit of 169.4 billion won (up 65.5%). The heavy industry segment is expected to drive performance, while the construction segment is also anticipated to see profit improvement as one-time costs dissipate.
Mid-to-long-term growth drivers are also clear. Hyosung Heavy Industries secured orders worth approximately 780 billion won for 765kV power equipment in February this year, with additional orders expected in North America. The 765kV equipment business is considered highly profitable due to high technological barriers to entry. The potential easing of U.S. tariff burdens is also cited as a factor that could improve transformer export competitiveness.
Capital investment is proceeding aggressively. The company plans to expand ultra-high voltage transformer production capacity at its Memphis, U.S. plant to $400 million in annual revenue by the end of 2026, and further increase it to $600-700 million by the end of 2028. New facilities dedicated to GIS circuit breakers and HVDC ultra-high voltage transformers will also be built at the Changwon plant.
Annual earnings outlook is steep. LS Securities expects this year's operating profit to reach 1.0835 trillion won (up 45.1%), while SK Securities forecasts operating profit to grow to 1.6779 trillion won by 2027.
