KOSPIElectrical Equipment010120

LS Electric

₩209,500▲ 1.70%2026-10-02 close

Market Cap

₩31.4T

Turnover

₩59.8B

Volume

290,000 shares

Shares out.

150M

PER

74.7×

PBR

13.6×

EPS

₩2,614

Dividend Yield

0.31%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩600 per share · Prices as of the 2026-10-02 close

Report overview

Record Orders, With Backlog Conversion as the Variable

Demand from North American AI data center power infrastructure has driven both record quarterly earnings and record order intake, yet roughly half of the backlog sits in extra-high-voltage transformers with long revenue recognition, making conversion speed the key thing to watch.

1
Second-quarter 2026 revenue of KRW 1.577tn and operating profit of KRW 178.5bn marked a record quarter, with the operating margin rising into the 11% range.
2
Second-quarter new orders of KRW 2.08tn set a quarterly record, first-half cumulative orders reached about KRW 3.2tn, backlog grew to KRW 7.0tn, and the company raised its annual order guidance from KRW 4tn to KRW 6-6.5tn.
3
Second-quarter power segment revenue of KRW 1.09tn accounted for about 70% of the total, and the export share widened to 53%. North American revenue hit a quarterly record of about KRW 400bn.
4
Of the backlog, 48% is extra-high-voltage transformers, 28% switchgear and 5% EHV gas-insulated switchgear; transformers take longer to convert into revenue, so about half the backlog will be recognized from 2027 onward.
5
Maeil Shinmun reported in June 2026 that the three Korean power equipment names had corrected by 30-plus percent within a month, a reminder that industry indicators and share price volatility are moving together.

Business structure

LS Electric is organized around a power business covering power devices and power infrastructure, an automation business handling PLCs and inverters, and a group of domestic and overseas subsidiaries.

In the second quarter of 2026, power segment revenue of KRW 1.09tn represented about 70% of total revenue, and the export share climbed to 53%.

Automation revenue in the same period was KRW 97.9bn with operating profit of KRW 9.4bn, supported by expanding domestic facility investment and a rising share of auto and semiconductor customers.

The product range spans low- and medium-voltage switchgear and breakers, extra-high-voltage transformers, gas-insulated switchgear, power conversion systems for energy storage, and power control and grid solutions.

A portfolio spanning the data center power value chain, from grid interconnection to internal electrical room distribution and on-site generation power packages, is cited as a core strength.

Subsidiary LS Power Solution was renamed after its 2024 acquisition and has since extended its product scope up to the 345kV class, broadening its overseas customer base.

Customers divide into domestic utilities and industrial capex buyers, very large US investor-owned utilities, and big tech data center and on-site generation developers.

Production is run as a localized value chain covering sales, engineering, manufacturing and service, anchored by domestic plants plus LS Electric Utah and the Bastrop campus in Texas.

Competitively, it faces Hyosung Heavy Industries and HD Hyundai Electric at home and global players such as Eaton, Schneider Electric and ABB abroad.

Earnings trend

Quarterly revenue · Operating profit

₩1.2T₩108.6B25Q2₩1.2T₩100.8B25Q3₩1.5T₩129.7B25Q4₩1.4T₩126.6B26Q1₩1.6T₩178.5B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩3.4T₩187.5B2022₩4.2T₩324.9B2023₩4.6T₩389.7B2024₩5T₩426.4B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.2T	₩108.6B	9.1%
2025Q3	₩1.2T	₩100.8B	8.3%
2025Q4	₩1.5T	₩129.7B	8.5%
2026Q1	₩1.4T	₩126.6B	9.2%
2026Q2	₩1.6T	₩178.5B	11.3%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩3.4T	₩187.5B	₩90.3B	5.6%	5.8%	114.5%
2023	₩4.2T	₩324.9B	₩206B	7.7%	12.0%	116.5%
2024	₩4.6T	₩389.7B	₩238.7B	8.6%	13.0%	137.3%
2025	₩5T	₩426.4B	₩286.6B	8.6%	13.8%	131.5%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

Annual revenue expanded four years running, from KRW 3.377tn in 2022 to KRW 4.231tn in 2023, KRW 4.552tn in 2024 and KRW 4.966tn in 2025, while operating profit rose from KRW 187.5bn to KRW 324.9bn, KRW 389.7bn and KRW 426.4bn.

The operating margin stepped up from 5.6% in 2022 to 7.7% in 2023 and 8.6% in both 2024 and 2025.

Quarterly, from second-quarter 2025 revenue of KRW 1.193tn and operating profit of KRW 108.6bn, the company moved through first-quarter 2026 revenue of KRW 1.377tn and operating profit of KRW 126.6bn (9.2% margin) to second-quarter 2026 revenue of KRW 1.577tn and operating profit of KRW 178.5bn, lifting the margin to 11.3%.

In a June 2026 Daily Invest report, brokerage commentary noted that unlike the first quarter there were no one-off cost effects in the second quarter, and that price increases on some products were being reflected.

NH Investment & Securities, in a report dated May 21, 2026, stated that LS Electric joined overseas peers Eaton, Schneider Electric and ABB in raising prices in March and April.

Summing the four most recent quarters (third-quarter 2025 through second-quarter 2026) gives revenue of about KRW 5.694tn and operating profit of about KRW 535.6bn, a margin near 9.4%; first-half 2026 operating profit of KRW 305.1bn alone equals roughly 72% of full-year 2025 operating profit.

Second-quarter extra-high-voltage transformer revenue rose 91.2% year on year, and subsidiary LS Power Solution revenue grew 39%.

First-quarter 2026 net profit attributable to owners of KRW 120.5bn came close to that quarter's operating profit, suggesting non-operating contributions whose details need to be checked in the filings.

Cash flow improved from operating cash outflow of KRW 145.4bn in 2022 to inflows of KRW 214.6bn in 2023, KRW 230.1bn in 2024 and KRW 299.9bn in 2025, while the debt-to-equity ratio rose from 114.5% in 2022 to 131.5% in 2025, showing the financial load that accompanies the capacity build-out.

Industry analysis

The end market is in a phase where new AI data centers, aging grid replacement and renewables-linked investment are all proceeding at once.

Prolonged equipment shortages driven by data centers and reshoring projects have led global suppliers to raise prices, and the reading is that pricing power can hold as long as the shortage persists.

Global data center power demand is projected to expand from 40GW in 2025 to 106GW in 2035, and the North American data center power infrastructure market from USD 8.65bn in 2025 to USD 37.2bn in 2035.

At the end of the first quarter, backlogs stood at KRW 20.196tn for Hyosung Heavy Industries, KRW 11.6tn for HD Hyundai Electric and KRW 5.643tn for LS Electric, with all three up by double digits year on year.

All three raised order guidance in the first half of 2026: HD Hyundai Electric from USD 4.2bn to USD 5.2bn, Hyosung Heavy Industries from KRW 8.4tn to KRW 12tn, and LS Electric from KRW 4tn to KRW 6-6.5tn.

Its absolute backlog is smaller than peers, but LS Electric's position is defined by a switchgear-weighted mix with relatively short lead times, which the market views as allowing added orders to convert into revenue comparatively quickly.

Sector growth drivers are also broadening from extra-high-voltage transformers into gas-insulated switchgear, low- and medium-voltage distribution devices and grid control and automation, with the distribution market understood to be larger than the transmission market.

Peers are responding with capacity too: HD Hyundai Electric plans to complete a second Alabama plant in April 2027 to lift power transformer capacity by about 50%, while Hyosung Heavy Industries is on a third Memphis expansion aiming for more than 50% capacity growth by 2028.

Outlook

Alongside its second-quarter results, the company raised full-year order guidance from KRW 4tn to KRW 6-6.5tn.

Management highlights that US big tech data center investment is now feeding directly into its order book, that it has secured 50 local distribution-equipment dealers, and that switchgear lead times for big tech customers are within 10 months, converting to revenue faster than transmission transformers that take over two years.

Order momentum continued after the results.

On August 18, 2026 it signed a USD 34.2585mn (about KRW 48.6bn) contract with Bloom Energy to supply a full distribution system for data center power infrastructure in Wyoming, and on August 24 it won a KRW 230.9bn AI data center power equipment project from a North American big tech firm, an upsizing at the customer's request of a KRW 106.4bn 38kV high-voltage distribution contract signed in June.

On capacity, a second production building at the Hwajeon site in Busan, built with about KRW 100bn of investment, was completed late last year, lifting extra-high-voltage and HVDC converter transformer capacity from about KRW 200bn to KRW 600bn.

In the US, investment continues at LS Electric Utah and the Bastrop campus in Texas, with the Utah expansion due for completion in the second half of 2027.

The company plans to invest a total of USD 240mn in North American production bases through 2030 to build a local value chain, and to open new business bases in Dallas, Texas and Atlanta, Georgia.

On the new product side, the DC Factory in Cheonan made its first shipment of the G2 power conversion system for energy storage on August 5, 2026, roughly a month after completion, with initial supply going to LG Energy Solution.

Jang Nam-hyun of Korea Investment & Securities, in a June 2026 report, cited delivery speed more than 30% faster than peers and forecast that 2026 North American data center-related orders would grow over 50% year on year to exceed KRW 1.5tn.

Valuation

PER

74.7×

PBR

13.6×

ROE

19.3%

EPS

₩2,614

BPS

₩14,319

Dividend per share

₩600

Profits have traced a clear recovery path since 2022 and the quarterly operating margin moved into double digits in the first half of 2026, yet the multiples embedded in the share price sit well above the historical trading band that prevailed before the power equipment sector was re-rated.

On a price-to-book basis the shares also trade at a very large premium to net assets, which makes the durability of the growth assumptions the condition for those multiples.

Lead Economy reported in July 2026 that, following the second-quarter results, Daishin Securities set a target price of KRW 330,000, SK Securities KRW 310,000, and Yuanta Securities and Mirae Asset Securities KRW 300,000 and KRW 280,000 respectively, with applied multiples rising to 40-43 times estimated 2028 earnings.

A Daishin Securities comment cited by Infostock Daily judged that high visibility on strong earnings growth could justify a share price premium versus peers - that is the brokerage's view, not KOSAI's.

Separately, one reading of the sector's share price decline in 2026 attributed it more to valuation multiple compression than to any collapse in earnings.

Dividends remain modest relative to the scale of earnings, consistent with a phase in which capital allocation is prioritized toward domestic and overseas capacity and local value chain build-out.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Order Channels Widened by Direct Big Tech Business

US big tech data center investment has begun feeding directly into the order book, and the company entered the high-barrier premium customer market after securing 50 local distribution equipment dealers.

It is supplying, or in delivery discussions for, extra-high-voltage transformers, converter transformers and switchgear solutions with at least three of the four largest US big tech firms.

Industry observers note that once a distribution equipment vendor clears the entry barrier, replacement demand generates recurring revenue, so winning premium customers can itself act as a buffer for medium-term earnings. A June contract was in fact more than doubled in August at the customer's request.

Lead-Time Advantage from Capacity and Localization

Completion of the second production building at the Hwajeon site in Busan, funded with about KRW 100bn, expanded extra-high-voltage and HVDC converter transformer capacity more than threefold.

Analysis suggests that raising local production through the twin hubs of MCM Engineering II in Utah and the Bastrop plant in Texas can sharply compress lead times that previously ran 12-15 weeks. The company said its production bases established in Utah in 2022 and Texas in 2025 helped it secure recent orders.

Industry accounts also indicate North American customers were inquiring about switchgear supply even before the expanded plant was finished.

Margins Lifted by Both Pricing and Mix

The 11.3% operating margin in the second quarter of 2026 stands out against 5.6% for full-year 2022 and 8.6% for full-year 2025. Strong switchgear and extra-high-voltage transformer sales, driven by the US power market and expanding data center investment, led the earnings growth.

NH Investment & Securities stated in a May 21, 2026 report that LS Electric joined the March-April round of price increases. The previously soft automation business also recovered, with second-quarter operating profit of KRW 9.4bn, up 109% year on year.

Bear factors

High Multiples Resting on Growth Assumptions

Lead Economy noted in July 2026 that applied multiples in the target price upgrades jumped to 40-43 times estimated 2028 earnings, that this embeds an assumption of several more years of high growth, and that valuation would likely react first if the growth story wobbles.

Earlier in the first half of 2026, profit-taking and fund flow rotation had already produced a 30-plus percent one-month correction across the three power equipment names. In other words, sector multiple swings can explain a large share of share price volatility independent of earnings themselves. This is an axis readers should assess separately from the bullish logic.

Half the Backlog Is Long-Dated

Of the KRW 7.0tn backlog, 48% is extra-high-voltage transformers, with switchgear at 28% and EHV gas-insulated switchgear at 5%; transformers take longer to reach revenue, so roughly half the backlog will be recognized from 2027 onward.

A 345kV transformer order won in April 2026 has a delivery window running from the fourth quarter of 2027 into the first half of 2028. A large 525kV contract won in November 2025 has a delivery period from 2027 to 2029.

The crux is whether US local expansions start up on schedule and how fast the backlog can be turned into revenue.

Concentration in the US and Data Centers

The growth axis has tilted rapidly toward the US and data centers, with exports reaching 53% of power segment revenue, leaving much of the earnings improvement dependent on North American data center projects.

Some market participants have persistently flagged the possibility of hyperscalers swinging to negative free cash flow amid heavier AI investment, and the risk of a data center capex slowdown.

The greater the reliance on a single customer group, the larger the earnings impact from shifts in that group's investment cycle. Where the end customer is a big tech firm, names are withheld under non-disclosure agreements, making it hard for outsiders to verify how diversified the customer base actually is.

Risk factors

End Demand and Customer Concentration

Concern about a data center capex slowdown remains a standing variable for the whole sector. Switchgear contracts convert to revenue quickly thanks to short lead times, but that cuts both ways if order flow turns down.

With North American revenue at a record quarterly KRW 400bn, sensitivity to one region's cycle and policy shifts has risen in parallel. Quarterly new orders and shifts in backlog composition warrant tracking as a time series.

Execution, Trade and Costs

The Utah expansion is slated for completion in the second half of 2027, and any startup delay could affect the pace of backlog conversion.

In 2026 Korean power equipment makers faced trade variables including higher US transformer and steel tariffs and reciprocal duties, and have responded by using the supplier-favorable market to raise pricing on new orders.

Tariffs, exchange rates and raw material prices such as copper and electrical steel can affect margins over the gap between contract signing and revenue recognition. When peer expansions in Alabama and Memphis come onstream, any easing of shortage conditions and the resulting pricing environment also merit monitoring.

Balance Sheet and Capital Allocation

The debt-to-equity ratio has stayed above earlier levels, at 114.5% in 2022, 116.5% in 2023, 137.3% in 2024 and 131.5% in 2025.

Operating cash flow improved from an outflow of KRW 145.4bn in 2022 to an inflow of KRW 299.9bn in 2025, but with multiple expansions running at once, working capital and capex can pull on cash flow simultaneously.

The plan to invest a total of USD 240mn in North American production bases through 2030 also weighs on capital allocation. How the company balances dividend capacity against expansion funding is a point to verify.

What to watch next

Late October 2026
Third-quarter 2026 results. The key questions are whether the operating margin that reached 11.3% in the second quarter holds, and how much of the backlog that grew to KRW 7.0tn converts into revenue.
Fourth quarter of 2026
Progress against the annual new order guidance raised to KRW 6-6.5tn. After about KRW 3.2tn cumulative in the first half, the question is whether second-half order pace matches the upper end.
Ongoing from September 2026
Single supply contract filings. The company's disclosure threshold for single supply contracts is about KRW 124.1bn, so large deals with big tech and on-site generation developers, as well as upsizings of existing contracts, can be verified directly in filings.
Around February 2027
Full-year 2026 results, the dividend decision and 2027 order guidance. This is when the balance of capital allocation between dividends and capex during the expansion phase becomes visible.
Second half of 2027
The scheduled completion of the Utah expansion in the US. Whether local capacity comes onstream as planned will shape North American lead-time competitiveness and backlog conversion speed.

Overall view

LS Electric's recent trajectory is unambiguous. Revenue rose from KRW 3.377tn in 2022 to KRW 4.966tn in 2025 and operating profit from KRW 187.5bn to KRW 426.4bn, while second-quarter 2026 revenue of KRW 1.577tn and operating profit of KRW 178.5bn lifted the margin to 11.3%.

Record quarterly orders, a backlog approaching KRW 7tn and the upgraded annual order guidance show that North American data center power infrastructure demand is translating into actual contracts.

That said, with 48% of the backlog in extra-high-voltage transformers and roughly half to be recognized from 2027 onward, the pace at which growth is actually felt depends on expansion startups and delivery management.

A 53% export share and the tilt toward North America and data centers is both the growth engine and a source of heightened sensitivity to a single investment cycle.

On valuation, there is a coexisting view that because the multiples applied in brokerage target price calculations have risen sharply, valuation could react first if the growth premise falters. This report is for information purposes only and contains no buy or sell opinion or target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

Show 18 more articles and sources

Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.