KOSPIElectrical Equipment103590

Iljin Electric

₩86,200▲ 3.98%2026-10-02 close

Market Cap

₩4.1T

Turnover

₩55.9B

Volume

650,000 shares

Shares out.

47.7M

PER

23.2×

PBR

5.0×

EPS

₩2,950

Dividend Yield

0.73%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩500 per share · Prices as of the 2026-10-02 close

Report overview

Backlog Near KRW 2.7tn, Margins Moved First

As North American extra-high-voltage transformer and cable orders convert into sales, the operating margin has moved from the low single digits into double digits, while tariffs, raw materials and rivals' local capacity build-outs remain on the other side of the ledger.

1
In 2025 consolidated revenue was KRW 2,044.5bn with operating profit of KRW 151.2bn, a 7.4% operating margin, up from 2.7% in 2022 after three straight years of improvement.
2
In Q2 2026 revenue reached KRW 637.4bn and operating profit KRW 72.0bn, lifting the quarterly operating margin above 11%, with net profit attributable to owners of KRW 49.9bn.
3
The company put end-H1 2026 backlog at about USD 1.94bn (as reported by Hankyung and Ajunews on Aug 11, 2026), split roughly 67% heavy electric equipment and 33% cable, with overseas orders about 76%.
4
The second Hongseong plant, completed in October 2024, expanded transformer and extra-high-voltage cable capacity, and management had targeted full utilization in 2026.
5
Leverage remains a watch item: the debt-to-equity ratio rose to 159.2% at end-2025 from 149.7% in 2024, and operating cash flow of KRW 86.9bn trailed net profit of KRW 103.9bn.

Business structure

Iljin Electric runs two businesses: heavy electric equipment (transformers, circuit breakers, gas-insulated switchgear) and wire and cable (extra-high-voltage cable, distribution cable, bare copper wire).

The company describes itself as the only Korean firm able to manufacture in-house both extra-high-voltage power equipment such as transformers and breakers and the cables that go with them (as reported by Ajunews on June 26, 2026).

Segment revenue mix is not disclosed regularly, but on an end-H1 2026 backlog basis, heavy electric equipment accounted for about 67% and cable about 33% (as reported by Hankyung on Aug 11, 2026).

Its Hongseong plant in Chungcheongnam-do builds generator step-up transformers, 765kV transmission transformers, nuclear and offshore-wind transformers and eco-friendly insulating-oil units (as reported by Asia Today on Nov 6, 2025).

Customers span domestic utilities and EPC and power developers, North American public power authorities and utilities, renewable and energy-storage developers, and Middle East buyers; management says its supply record to North American power authorities exceeds 20 years.

Regional diversification is under way: in October 2025 it entered the US western extra-high-voltage market via a 500kV California project, made its first European inroad with a 132kV transformer project for a UK data center, and won a 132kV gas-insulated switchgear order in Saudi Arabia (as reported by Asia Today on Nov 6, 2025).

In cable, the company is expanding orders on turnkey extra-high-voltage capability and says it completed development of high-voltage direct current cable in December 2023 while pursuing North American and European awards.

Competitively, Hyosung Heavy Industries, HD Hyundai Electric and LS Electric sit above it with far larger backlogs and US plants, leaving Iljin Electric to differentiate through package supply of transformers plus cable and through mid-size, high-specification projects.

In June 2026 it won an about KRW 23.9bn package covering the offshore substation, onshore switching station equipment and internal cabling for the Sinan Ui offshore wind project, securing a domestic offshore-wind track record.

Earnings trend

Quarterly revenue · Operating profit

₩522.8B₩37.6B25Q2₩450.2B₩35.3B25Q3₩614.2B₩44.2B25Q4₩506.1B₩50.8B26Q1₩637.4B₩72B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩1.2T₩31.5B2022₩1.2T₩60.8B2023₩1.6T₩79.7B2024₩2T₩151.2B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩522.8B	₩37.6B	7.2%
2025Q3	₩450.2B	₩35.3B	7.8%
2025Q4	₩614.2B	₩44.2B	7.2%
2026Q1	₩506.1B	₩50.8B	10.0%
2026Q2	₩637.4B	₩72B	11.3%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩1.2T	₩31.5B	₩24.2B	2.7%	7.0%	143.4%
2023	₩1.2T	₩60.8B	₩34.5B	4.9%	9.3%	150.3%
2024	₩1.6T	₩79.7B	₩46.2B	5.1%	9.2%	149.7%
2025	₩2T	₩151.2B	₩103.9B	7.4%	17.6%	159.2%

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

The trend shows revenue and margins rising together. Revenue grew for three consecutive years, from KRW 1,164.7bn in 2022 to KRW 1,246.7bn in 2023, KRW 1,577.2bn in 2024 and KRW 2,044.5bn in 2025, while operating profit moved from KRW 31.5bn to KRW 60.8bn, KRW 79.7bn and KRW 151.2bn.

The operating margin improved from 2.7% to 4.9%, 5.1% and 7.4%, and net profit attributable to owners rose from KRW 24.2bn in 2022 to KRW 103.9bn in 2025.

Quarterly, Q2 2025 delivered revenue of KRW 522.8bn and operating profit of KRW 37.6bn (about 7.2% margin), Q3 KRW 450.2bn and KRW 35.3bn (about 7.9%), and Q4 KRW 614.2bn and KRW 44.2bn (about 7.2%).

Brokerage commentary noted that a warranty provision of roughly KRW 6.3bn booked in Q2 2025 dropped out in Q3 (as reported by Bizwatch on Dec 10, 2025, citing Shinhan Investment Corp).

In 2026, Q1 revenue of KRW 506.1bn with operating profit of KRW 50.8bn lifted the margin to about 10.0%, and Q2 revenue of KRW 637.4bn with operating profit of KRW 72.0bn took it to about 11.3%, a step change in margin level.

With the Q2 release, management attributed the gain to growth in both heavy electric equipment and cable plus expanded overseas cable orders, and the US share of revenue was cited at 17.4% (reported from a Mirae Asset Securities note dated Aug 12, 2026).

Summing the latest four quarters gives revenue of about KRW 2,207.8bn, operating profit of about KRW 202.3bn and net profit attributable to owners of KRW 140.6bn, already above the full-year 2025 figures.

Cash generation, however, has lagged the profit ramp: 2025 operating cash flow of KRW 86.9bn was below both the 2024 figure of KRW 105.7bn and net profit, and the debt-to-equity ratio rose to 159.2% from 149.7%.

Working capital tied up in inventory and receivables to execute the long-dated backlog is the commonly cited reason for that gap.

Industry analysis

The end market sits in a shortage phase driven by US aging-grid replacement, AI data center build-outs and European renewable expansion.

Analyses note that the US imports more than 80% of its transformers and that lead times have stretched from about one year to as long as four (as reported by TechDaily in June 2026 and Global Economic in May 2026).

The North American Electric Reliability Corporation warned in its 2026 assessment that 24 US states face elevated risk from power shortfalls (as reported by Global Economic on May 11, 2026).

With supply tight, market commentary describes a shift in bargaining power under which manufacturers select orders based on profitability and delivery slots.

Scale differences versus domestic peers are large: the combined backlog of Hyosung Heavy Industries, HD Hyundai Electric and LS Electric was put at KRW 27,351.2bn as of Q3 2025 (as reported by Bloter on Jan 6, 2026), and all three are expanding US production bases.

Iljin Electric is smaller but positions itself through the Hongseong expansion and its ability to supply power equipment and cable together.

In cycle terms, orders covering several years have already been banked, so the debate has shifted from new-order momentum to shipment execution and the durability of pricing and margins.

Tariffs cut both ways: reports flag preferential treatment discussed for extra-high-voltage transformers under the Section 232 overhaul, while large liquid-filled transformers face duties tied to steel and aluminum content alongside copper tariffs (as reported by Electric Journal and TechDaily).

Outlook

Management's stated direction is continued shipment of already-secured volumes.

With the Q2 2026 release, a company official said booked orders keep shipping so Q3 results should also be solid, and that large projects expected in the second half should substantially increase order intake (as reported by Ajunews and Hankyung on Aug 11, 2026).

On orders, in January 2026 the company signed a KRW 198.0bn contract with a US renewable and energy-storage developer to supply 24 units of 525kV-class extra-high-voltage transformers, with deliveries running through Q3 2029.

In April 2026 it signed a transformer supply contract with a Canadian power producer via its US sales arm ILJIN Electric USA; the filing put the amount at KRW 51.9bn running to December 2028, and about KRW 120.9bn including the first tranche signed in March 2025.

Domestically it won the Sinan Ui offshore wind power equipment package in June, and it says it is pursuing participation in the roughly KRW 10tn West Coast Energy Highway grid program.

Capacity for both transformers and extra-high-voltage cable was expanded through the second Hongseong plant completed in October 2024, and management had targeted full utilization in 2026 (as reported by Finance Scope in January 2025).

The company says HVDC cable development was completed in December 2023 with North American and European orders being pursued, so the timing of an actual reference win is the next item to verify.

Notably, the company does not publish specific annual revenue or operating profit guidance, so quarterly filings and backlog disclosures are the practical checkpoints.

Valuation

PER

23.2×

PBR

5.0×

ROE

23.7%

EPS

₩2,950

BPS

₩13,724

Dividend per share

₩500

The earnings-based multiple sits above the band this stock traded in during the years when its margin was in the low single digits.

It also carries a premium to net assets; indeed, a past brokerage note explicitly set a target price-to-book above the historical band (SK Securities, explaining it reflected the extra-high-voltage transformer upcycle).

The company maintains an annual cash dividend, but the payout is modest relative to profit, so the dividend yield itself is on the low side, consistent with capital being directed first to capacity and working capital.

Profit direction has been one of recovery and expansion, with the latest four quarters already exceeding full-year 2025 figures, so how the multiple looks depends heavily on whether this earnings level holds.

On target prices, Mirae Asset Securities analyst Kim Tae-hyung reportedly maintained a Buy rating and raised his target price to KRW 114,000 in a report dated Aug 12, 2026, citing the rising North American share of heavy electric equipment revenue and the roughly three-year lag between orders and shipments extending into 2029 volumes.

That is the brokerage's view rather than KOSAI's, and rising leverage plus tariff and raw-material variables belong in the same discussion.

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

Earnings visibility from the backlog

The company said end-H1 2026 backlog stood at about USD 1.94bn, up roughly 10% from Q1 (as reported by Hankyung on Aug 11, 2026). Heavy electric equipment made up about 67% and overseas orders about 76%, skewing the book toward high-specification export work.

The US 525kV transformer contract signed in January 2026 delivers through Q3 2029, and an earlier US long-term supply agreement runs to 2030, stretching the revenue recognition window. That structure means shipments can continue even if quarterly order intake fluctuates.

Mix improvement showing up in margins

The quarterly operating margin moved from the 7% range in Q2-Q4 2025 to about 10.0% in Q1 2026 and about 11.3% in Q2 2026. On an annual basis the margin improved from 2.7% in 2022 to 7.4% in 2025.

Brokerage commentary attributed the improvement to higher-margin US transformer volumes flowing through and a rising share of extra-high-voltage cable (as reported by Bizwatch on Dec 10, 2025). If utilization at the second Hongseong plant climbs further, there is still room for better fixed-cost absorption.

Selling power equipment and cable together

The company says it is the only Korean firm able to make extra-high-voltage transformers, breakers and cable in-house (as reported by Ajunews on June 26, 2026).

In June 2026 it demonstrated that package capability on the Sinan Ui offshore wind project by winning offshore substation and onshore switching station equipment together with internal cabling. Management's stated strategy is to supply the full set of offshore wind power equipment excluding submarine cable as a bundle.

First entries into Europe and the Middle East are also accumulating in a way that dilutes regional concentration.

Bear factors

Twin pressure from tariffs and raw materials

Large liquid-filled transformers face duties on steel and aluminum content on top of baseline reciprocal tariffs, with copper import duties expected to add further cost (as reported by Electric Journal).

Preferential treatment for extra-high-voltage transformers has been discussed under the Section 232 overhaul (as reported by TechDaily in June 2026), but shifts in item-level coverage could unsettle export economics.

Grain-oriented electrical steel and copper price swings are also cited as items to monitor for their margin impact (as reported by Global Economic in May 2026). A structure weighted toward exports without a US production base carries relatively higher sensitivity to these variables.

Scale and local production gap versus peers

The combined backlog of Korea's three large power equipment makers stood at KRW 27,351.2bn as of Q3 2025, and all three are building or expanding US plants in states such as Alabama and Tennessee (as reported by Bloter on Jan 6, 2026).

If US policy pushes harder toward domestic manufacturing, having a local base could determine eligibility to bid at all. Commentary also flags that supply tightness may ease once large plants from global rivals such as Hitachi come online (as reported by Global Economic in May 2026). In that case the current environment of selective order-taking and firm pricing could weaken.

The gap between cash flow and leverage

Operating cash flow of KRW 86.9bn in 2025 was down from KRW 105.7bn in 2024 and below the same year's net profit attributable to owners of KRW 103.9bn. The debt-to-equity ratio rose to 159.2% in 2025 from 149.7% in 2024, with total liabilities around KRW 937.3bn.

As long-dated projects are executed, growing inventory and receivables can keep the gap between profit and cash open. The point to weigh is that rising profit does not automatically translate into immediate balance-sheet relief.

Risk factors

Demand and policy risk

A large share of demand is tied to US grid investment and AI data center capital spending. Market commentary points to big tech capex execution pace and the US Department of Energy's actual grid modernization outlays as gauges of cycle durability (as reported by Global Economic in May 2026).

Potential energy policy shifts following the November 2026 US midterm elections are also cited as a variable. If this flow slows, new order intake would likely react first.

FX and contract risk

With about 76% of backlog overseas, a high share of contracts is in foreign currency, so exchange rates affect translated revenue and profit.

As with the April 2026 contract for a Canadian power producer, disclosed amounts are converted at a point-in-time rate, and the filing itself notes the value and period may change with delivery progress.

For long-dated contracts, the key margin question is how much raw material and currency movement is passed through in contract terms. Project delays or specification changes can also shift recognition timing.

Execution and quality risk

Brokerage commentary noted a warranty expense of about KRW 6.3bn hitting Q2 2025 results (as reported by Bizwatch on Dec 10, 2025). Extra-high-voltage transformers are a product class where quality incidents can push warranty or rebuild costs straight into quarterly profit.

Early-stage productivity loss at new plants is a recurring concern flagged during expansion phases (citing Shinhan Investment Corp, as reported by Bizwatch on Dec 10, 2025). As utilization ramps, yield and delivery management can become the main source of margin volatility.

What to watch next

Mid-November 2026
Q3 quarterly report and earnings disclosure: check whether the operating margin that rose above 11% in Q2 holds, and how the US revenue share and backlog compare with the roughly USD 1.94bn reported at end-H1.
Q4 2026
Whether single-supply contract filings appear for the large projects management said it expects in the second half; contract size and delivery windows shape revenue visibility into 2029-2030.
November 2026
The US midterm elections and the ensuing energy and infrastructure policy direction; grid budget execution and changes to renewable support can affect the pace of North American orders.
February-March 2027
Full-year 2026 results and the annual business report: a single point to verify the annual operating margin, second Hongseong plant utilization, segment backlog, the dividend decision, and changes in operating cash flow and leverage.
First half of 2027
Whether a first HVDC cable reference order is secured in North America or Europe, and how detailed Section 232 application evolves; the former is a new growth axis, the latter feeds directly into export profitability.

Overall view

Iljin Electric combines heavy electric equipment centered on transformers and breakers with a cable business centered on extra-high-voltage products, and both orders and earnings have expanded as North American grid replacement overlapped with AI data center demand.

Confirmed figures show revenue rising from KRW 1,164.7bn in 2022 to KRW 2,044.5bn in 2025 with the operating margin improving from 2.7% to 7.4%, followed by a step change to about 10.0% in Q1 2026 and about 11.3% in Q2 2026.

The company reported end-H1 2026 backlog of about USD 1.94bn, roughly 67% heavy electric equipment and about 76% overseas, giving reasonable shipment-based visibility.

On the other side sit tariffs applied to large liquid-filled transformers, copper and electrical steel prices, the scale gap versus larger peers with US plants, and the possibility that global capacity additions around 2028 ease the shortage.

Financially, operating cash flow below net profit and leverage rising from 149.7% to 159.2% remain open items separate from the profit improvement.

Valuation multiples sit above the band seen in the low-margin years and carry a premium to net assets, so the interpretive pivot is whether this earnings level is sustained.

The next checkpoints are margin durability in the Q3 results in mid-November, large order filings in the second half, and the utilization and cash flow figures that emerge with full-year results in early 2027. This report is for information purposes and contains no buy or sell opinion and no target price.

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.