KOSDAQElectrical Equipment033100

Cheryong Electric

₩49,550▲ 1.43%2026-10-02 close

Market Cap

₩793.5B

Turnover

₩5.2B

Volume

110,000 shares

Shares out.

16.1M

PER

13.0×

PBR

2.9×

EPS

₩3,420

Dividend Yield

2.48%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,100 per share · Prices as of the 2026-10-02 close

Report overview

Jeryung Electric: US Transformer Boom Meets Earnings Reset

Jeryung Electric has grown on high-margin US distribution-transformer exports, but since 2025 both revenue and operating margin have entered a downward adjustment phase.

1
The 2025 consolidated operating margin fell to 29.9% from 37.2% in 2024, marking the first simultaneous decline in both revenue and profit in three years.
2
Revenue and operating profit fell for two consecutive quarters in 2026, yet Q2 net income far exceeded operating profit, suggesting a significant non-operating factor.
3
The company increased its distribution-transformer supply contract with US utility PSE&G to about KRW 53.175 billion, extending revenue visibility through December 2027.
4
In March 2026, the company acquired property in Daejeon from Robert Bosch Korea for about KRW 40 billion to expand capacity and enter the mid/large transformer segment.
5
Aging North American grids and AI data-center power demand remain the structural industry backdrop, but intensifying competition and tariff policy are also emerging as key issues.

Business structure

Founded in 1986, Jeryung Electric was reorganized in 2011 through a spin-off into a KOSDAQ-listed heavy electrical equipment company focused on manufacturing and selling transformers, switchgear, and gas-insulated switchgear (GIS).

Its core revenue comes from distribution transformers, followed by construction-related sales. Domestically, its main customers are Korea Electric Power Corporation (KEPCO) and construction firms, though weak construction activity limits private demand while public and policy-driven demand partially offsets this.

In the US market, however, supplying distribution transformers for aging grid replacement and utility projects generates the bulk of revenue, with an overwhelming share of total sales coming from US exports.

One of its key customers, US utility PSE&G, recently had its distribution-transformer supply contract increased and extended through 2027.

In terms of competitive positioning, large players such as HD Hyundai Electric, Hyosung Heavy Industries, and LS Electric focus on large-scale equipment including ultra-high-voltage transformers, GIS, and HVDC, whereas Jeryung Electric is classified as a niche player specializing in small-to-medium distribution transformers.

It also partially competes with specialty transformer makers such as Sangil Electric.

In March 2026, the company acquired property in Daejeon from Robert Bosch Korea for about KRW 40 billion to expand production capacity and broaden its product lineup into mid/large transformers, and around the same time disclosed a 'corporate value-up plan' emphasizing profitability-focused management, sustainable dividends, and new growth business development.

Earnings trend

Quarterly revenue · Operating profit

₩60.4B₩20.4B25Q2₩69.8B₩22.5B25Q3₩43.7B₩8B25Q4₩34.7B₩5.9B26Q1₩35.6B₩5.2B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩86.1B₩16B2022₩183.9B₩70.2B2023₩262.7B₩97.8B2024₩224B₩67B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩60.4B	₩20.4B	33.8%
2025Q3	₩69.8B	₩22.5B	32.3%
2025Q4	₩43.7B	₩8B	18.4%
2026Q1	₩34.7B	₩5.9B	17.0%
2026Q2	₩35.6B	₩5.2B	14.7%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩86.1B	₩16B	₩12.5B	18.6%	17.6%	24.1%
2023	₩183.9B	₩70.2B	₩56.4B	38.1%	45.2%	27.1%
2024	₩262.7B	₩97.8B	₩79.9B	37.2%	40.6%	22.9%
2025	₩224B	₩67B	₩58.7B	29.9%	24.5%	11.5%

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

Consolidated revenue in 2025 was KRW 224.0 billion, down from KRW 262.7 billion in 2024, while operating profit fell to KRW 67.0 billion from KRW 97.8 billion, lowering the operating margin from 37.2% to 29.9%.

Net income attributable to owners also declined from KRW 79.9 billion to KRW 58.7 billion, marking a phase where both revenue and profit contracted simultaneously.

The company attributed the slowdown mainly to intensifying competition amid stabilizing supply chains in the North American distribution-transformer market and to US government tariffs.

On a quarterly basis, revenue peaked at KRW 69.75 billion with operating profit of KRW 22.53 billion in Q3 2025, before falling to KRW 43.71 billion in Q4 2025 with a markedly lower operating margin, signaling the start of a clearer slowdown.

In Q1 2026, revenue and operating profit fell further to KRW 34.67 billion and KRW 5.89 billion, respectively, and Q2 2026 saw a similar operating margin level with revenue of KRW 35.65 billion and operating profit of KRW 5.23 billion.

However, Q2 2026 net income attributable to owners reached KRW 18.03 billion, far exceeding both the prior quarter (KRW 8.06 billion) and that quarter's own operating profit (KRW 5.23 billion), suggesting non-operating items had a substantial effect on the net income increase.

This means a large portion of the trailing four-quarter (Q3 2025-Q2 2026) cumulative net income of KRW 54.95 billion was concentrated in a single quarter, indicating volatility not fully explained by operating performance alone.

Compared with the high-growth period of 2022-2024, when operating margin rose from 18.6% to 38.1% and then held at 37.2%, the recent phase can be read as an adjustment period with both slower growth and thinner margins.

Industry analysis

The upstream industry is in a phase of prolonged supply shortage for both distribution and transmission transformers, driven by the combination of AI data-center expansion and aging US power grids.

The International Energy Agency (IEA) has projected that data-center electricity consumption will rise substantially through 2030, with the United States accounting for a large portion of that increase.

The US Department of Energy (DOE) has stated that distribution transformers face long lead times and component shortages.

Against this backdrop, the combined order backlog of Korea's large players—HD Hyundai Electric, Hyosung Heavy Industries, and LS Electric—has recently surpassed KRW 30 trillion, with assessments pointing to a persistent seller's market.

Jeryung Electric operates as a niche player focused on small-to-medium distribution transformers, a product category distinct from the large players' focus on ultra-high-voltage and HVDC equipment. In the US market, Korean-made transformers reportedly rank second in market share behind Mexico.

However, expanding US local production and shifts in tariff policy are cited as variables that could affect the price competitiveness of Korean products.

Outlook

In March 2026, the company acquired a second plant in Daejeon to expand production capacity, positioning it as a foundation for broadening its product lineup from distribution transformers into mid/large transformers.

Its distribution-transformer supply contract with US utility PSE&G was increased from about KRW 44.1 billion to KRW 53.175 billion, with the contract term running through December 2027, providing some medium-term revenue visibility.

In March 2026, the company also voluntarily disclosed a 'corporate value-up plan' emphasizing strengthened profitability-focused management, sustainable dividends, and development of new growth businesses.

Its decision to pay a cash dividend per common share for fiscal 2025 while maintaining a payout ratio in the 30% range can be seen as an extension of this plan.

On the industry side, many observers believe North American grid replacement and data-center power demand will not be resolved quickly, which could support the company's order environment if the transformer supply shortage persists.

However, given the company's high exposure to North America, assessments also note that tariffs, exchange rates, and localization competition could bring both earnings momentum and volatility.

Valuation

PER

13.0×

PBR

2.9×

ROE

24.0%

EPS

₩3,420

BPS

₩15,424

Dividend per share

₩1,100

The recent share price appears to reflect much of the earnings improvement from the 2022-2024 high-growth period, while also moving in tandem with the adjustment phase of declining revenue and operating margin since 2025.

Relative to net assets, the stock trades at a level reflecting a meaningful premium, suggesting that valuation perceptions formed during the earlier high-growth period still partly persist.

On the dividend side, the company continues a policy of maintaining a payout ratio in the 30% range, but given the current share price level, the dividend yield itself is assessed as lower than that of high-yield peers in the sector.

Considering that revenue and operating profit declined for consecutive quarters into 2026, the current valuation can be seen as forming in a period where profit contribution is lower than during the prior earnings peak.

How the ramp-up of the second Daejeon plant and execution of new contracts feed through to earnings is likely to be a key variable for any future valuation reassessment.

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

Structural Beneficiary of the North American Grid Supercycle

The combination of aging US power grids and surging AI data-center electricity demand has led to a prolonged shortage in distribution transformers.

The IEA has projected substantial growth in data-center power consumption through 2030, while the US DOE has formally noted long lead times and component shortages for transformers.

Since Jeryung Electric generates most of its revenue from this market, the order environment could remain favorable as long as the supply-demand imbalance persists.

High-Margin Niche Positioning and Secured Contracts with Major Customers

Unlike the large domestic players that focus on ultra-high-voltage and HVDC equipment, Jeryung Electric specializes in small-to-medium distribution transformers as a niche player.

Between 2022 and 2024 the company experienced a high-margin period in which operating margin rose from 18.6% to 38.1% and then held at 37.2%. Increasing its supply contract with US utility PSE&G to KRW 53.175 billion and extending its term through 2027 supports medium-term revenue visibility.

Capacity Expansion and Product Line Diversification

In March 2026, the company acquired a second Daejeon plant for about KRW 40 billion to expand capacity, and is pursuing product diversification from its core distribution-transformer business into mid/large transformers.

At the same time, it announced a corporate value-up plan emphasizing profitability-focused management and a sustainable dividend policy. If these investments and diversification efforts translate into results, they could broaden the company's medium-to-long-term business base.

Bear factors

Consecutive Revenue and Profit Slowdown

Consolidated revenue and operating profit both declined year-on-year in 2025, with the operating margin falling from 37.2% to 29.9%. Revenue and operating profit continued to decline year-on-year in both Q1 and Q2 2026.

The company itself has cited intensifying competition in the North American market and US tariffs as causes of the slowdown.

High Geographic and Customer Concentration

Because an overwhelming share of revenue depends on US exports, earnings are heavily influenced by US-driven variables such as exchange rates, tariffs, and expanding local production.

Domestic customers are concentrated in KEPCO and construction firms, limiting the buffering role of the domestic market during construction downturns. If localization competition from large domestic players and local US manufacturers intensifies, the price competitiveness advantage of Korea-based exports could weaken.

Non-Operating Volatility in Net Income

Q2 2026 net income attributable to owners reached KRW 18.03 billion, far exceeding both that quarter's operating profit of KRW 5.23 billion and the prior quarter's net income of KRW 8.06 billion. This suggests non-operating items may have had a substantial effect on net income.

Such volatility makes it difficult to explain net income trends through operating performance alone, increasing uncertainty in earnings forecasting.

Risk factors

Tariff and Trade Policy Risk

The company has already cited US government tariffs as one cause of the 2025 earnings slowdown. Any further changes in tariff rates or scope could directly affect export price competitiveness and margins.

Trade policy uncertainty remains a key variable given a business structure that depends heavily on the United States for revenue.

Intensifying Competition and Localization Risk

Gradual stabilization of the North American distribution-transformer supply chain has already intensified competition, a factor reflected in 2025 results.

If domestic and foreign manufacturers, including Korea's large players, continue expanding US local production, the relative advantage of Korea-based exports could narrow. This could pressure the company on both pricing and order volume.

Raw Material and Currency Volatility

Raw materials such as copper account for a significant portion of transformer manufacturing costs, and fluctuations in international copper prices can directly affect profitability.

Because an overwhelming share of revenue comes from dollar-denominated US exports, exchange rate movements also have a substantial impact on earnings. In periods such as Q2 2026, where operating profit and net income diverge significantly, it is important to verify the nature of non-operating profit and loss factors.

What to watch next

Mid-November 2026
The Q3 2026 quarterly report is due around this time; it will be important to check whether revenue and operating margin rebound and whether the net income-operating profit divergence seen in Q2 recurs.
During Q4 2026
Monitoring the utilization rate of the second Daejeon plant and progress on the mid/large transformer line can help gauge when expanded capacity begins translating into actual revenue.
Early February 2027
The annual fiscal 2026 results and dividend disclosure are expected around this time, allowing confirmation of whether the roughly 30% payout ratio policy is maintained and whether annual profit recovers.
Ongoing, upon contract disclosures
Any additional or expanded contract disclosures with major customers such as PSE&G or Eversource should be checked promptly for changes in revenue visibility.

Overall view

Jeryung Electric achieved high-margin growth between 2022 and 2024 on the back of US distribution-transformer exports, but since 2025 it has entered an adjustment phase in which both revenue and operating margin have declined simultaneously.

Revenue and operating profit continued to fall year-on-year in both Q1 and Q2 2026, and Q2 net income far exceeded operating profit, leaving open the possibility of a significant non-operating influence.

The company is seeking to broaden its medium-to-long-term growth base through the second Daejeon plant acquisition, entry into mid/large transformers, an increased PSE&G supply contract, and its corporate value-up plan.

On the industry side, North American grid replacement and AI data-center-driven power demand remain structural growth drivers, but intensifying competition and tariff/localization risks are equally prominent.

Valuation appears to be forming in a range that still reflects a premium to net assets carried over from the earlier high-growth period, with the pace of earnings recovery and the payoff from new investments likely to be key variables for any reassessment.

Before making investment decisions, it is advisable to continuously monitor upcoming quarterly results and contract disclosures to verify whether revenue and margins recover.

Sources

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

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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.