Corporate Logo(source: hyosungheavyindustries.com)
Yuanta Securities has initiated coverage on Hyosung Heavy Industries (298040) with a “Buy” rating and a target price of 1.22 million won, citing the company’s improving overall profitability driven by an increasing share of high-margin power equipment, despite continued pressure from its construction division.
Analyst Son Hyun-jung of Yuanta Securities stated on July 4, “We present Hyosung Heavy Industries as our top pick within the power equipment sector, given its transition toward a high value-added product mix and significant margin upside potential.”
According to Son, the company is rapidly expanding its orders in advanced markets such as the United States and Europe, leveraging its technological competitiveness in ultra-high-voltage transformers and gas-insulated switchgear (GIS). “A recently announced ultra-high-voltage GIS order in North America, valued at 264.1 billion won, is the largest single project in the company’s history and is aimed at U.S. nuclear power plants and selected data centers,” she explained. GIS equipment, characterized by short lead times and high margins, is leading the company’s product mix upgrade, while production capacity for ultra-high-voltage transformers is also expanding swiftly.
“The Changwon plant completed a 10% capacity expansion in the first half of 2025 and has begun operations,” she added. “Meanwhile, the Memphis plant in the U.S. is on track to double its capacity by the end of next year. By 2027, the combined ultra-high-voltage transformer production capacity of the Changwon and Memphis facilities is expected to increase by approximately 40%.”
Memphis is the only site in the United States capable of manufacturing 765kV transformers, which gives Hyosung Heavy Industries a strategic edge in addressing large-scale demand from North American customers, including AI data centers.
For the second quarter, the company is expected to post sales of 1.3594 trillion won, up 113.9% year-on-year, and operating profit of 135.5 billion won, up 116.2%. Son noted, “The operating margin of the heavy industries division is projected to reach a record high of 14.2%, driven by revenue recognition of U.S. transformer orders and a greater share of high-margin products in the mix.”
She also pointed to a structural shift in the order book. “North American orders now account for more than 40% of the total backlog, and in addition to large GIS projects, the company has further order potential with clients such as Company X. This is expected to significantly enhance earnings visibility in the second half of the year,” she said.
For full-year 2025, sales are projected at 5.485 trillion won, up 12.1% from the previous year, with operating profit estimated at 525 billion won, up 44.8%. Son concluded, “We anticipate Hyosung Heavy Industries will deliver stronger profit growth and faster margin improvement than its peers this year. By 2026, the company’s structural growth should fully materialize, as high-value North American orders are recognized and overseas capacity expansion—especially in Memphis—begins to bear fruit.”
*[KOSPI]Hyosung Heavy Industries(298040), a subsidiary of the Hyosung Group, produces and sells essential equipment for the power industry such as transformers, circuit breakers, as well as industrial production equipment including motors and gears. The market capitalization is 8.448 trillion won (as of July 3, 2025, closing price).
Corporate Logo(source: hyosungheavyindustries.com)
Yuanta Securities has initiated coverage on Hyosung Heavy Industries (298040) with a “Buy” rating and a target price of 1.22 million won, citing the company’s improving overall profitability driven by an increasing share of high-margin power equipment, despite continued pressure from its construction division.
Analyst Son Hyun-jung of Yuanta Securities stated on July 4, “We present Hyosung Heavy Industries as our top pick within the power equipment sector, given its transition toward a high value-added product mix and significant margin upside potential.”
According to Son, the company is rapidly expanding its orders in advanced markets such as the United States and Europe, leveraging its technological competitiveness in ultra-high-voltage transformers and gas-insulated switchgear (GIS). “A recently announced ultra-high-voltage GIS order in North America, valued at 264.1 billion won, is the largest single project in the company’s history and is aimed at U.S. nuclear power plants and selected data centers,” she explained. GIS equipment, characterized by short lead times and high margins, is leading the company’s product mix upgrade, while production capacity for ultra-high-voltage transformers is also expanding swiftly.
“The Changwon plant completed a 10% capacity expansion in the first half of 2025 and has begun operations,” she added. “Meanwhile, the Memphis plant in the U.S. is on track to double its capacity by the end of next year. By 2027, the combined ultra-high-voltage transformer production capacity of the Changwon and Memphis facilities is expected to increase by approximately 40%.”
Memphis is the only site in the United States capable of manufacturing 765kV transformers, which gives Hyosung Heavy Industries a strategic edge in addressing large-scale demand from North American customers, including AI data centers.
For the second quarter, the company is expected to post sales of 1.3594 trillion won, up 113.9% year-on-year, and operating profit of 135.5 billion won, up 116.2%. Son noted, “The operating margin of the heavy industries division is projected to reach a record high of 14.2%, driven by revenue recognition of U.S. transformer orders and a greater share of high-margin products in the mix.”
She also pointed to a structural shift in the order book. “North American orders now account for more than 40% of the total backlog, and in addition to large GIS projects, the company has further order potential with clients such as Company X. This is expected to significantly enhance earnings visibility in the second half of the year,” she said.
For full-year 2025, sales are projected at 5.485 trillion won, up 12.1% from the previous year, with operating profit estimated at 525 billion won, up 44.8%. Son concluded, “We anticipate Hyosung Heavy Industries will deliver stronger profit growth and faster margin improvement than its peers this year. By 2026, the company’s structural growth should fully materialize, as high-value North American orders are recognized and overseas capacity expansion—especially in Memphis—begins to bear fruit.”
*[KOSPI]Hyosung Heavy Industries(298040), a subsidiary of the Hyosung Group, produces and sells essential equipment for the power industry such as transformers, circuit breakers, as well as industrial production equipment including motors and gears. The market capitalization is 8.448 trillion won (as of July 3, 2025, closing price).