KOSPIElectrical Equipment267260

HD Hyundai Electric

₩677,000▲ 0.59%2026-10-02 close

Market Cap

₩24.4T

Turnover

₩71.6B

Volume

110,000 shares

Shares out.

36.1M

PER

30.2×

PBR

11.4×

EPS

₩23,637

Dividend Yield

0.75%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩5,350 per share · Prices as of the 2026-10-02 close

Report overview

Record Results on North American Transformer Boom; Execution of Capacity Build-Out Next

HD Hyundai Electric is in a phase where revenue, profit and order backlog have all expanded to record levels on North American grid replacement and data center investment, leaving capacity build-out timing and order execution as the next swing factors.

1
In 2025 revenue reached 4,079.5 billion won and operating profit 995.3 billion won for a 24.4% operating margin, a marked change in profitability versus 2022 revenue of 2,104.5 billion won and operating profit of 133.0 billion won (6.3% margin).
2
Second-quarter 2026 revenue was 1,141.8 billion won with operating profit of 287.0 billion won, putting the quarterly operating margin in the 25% area; the company cited a 25.1% margin.
3
On July 6, 2026 the company filed a revision raising its annual order target 22.8%, from 4.222 billion dollars to 5.185 billion dollars.
4
Order backlog at the end of the second quarter of 2026 stood at 8.49 billion dollars, up 29.6% year on year and 7.6% quarter on quarter.
5
The second plant in Alabama is under construction with completion targeted for April 2027, which the company says will expand extra-high-voltage transformer capacity by 50% versus current levels.
6
Regulatory and legal variables such as domestic bid-rigging allegations involving staff at the three Korean power equipment makers, plus simultaneous capacity additions by rivals, cut the other way.

Business structure

HD Hyundai Electric is a power equipment manufacturer built around three pillars: power devices centered on extra-high-voltage transformers and high-voltage circuit breakers; distribution equipment such as distribution transformers and switchgear; and rotating machinery including marine motors and land-based generators.

For the second quarter of 2026 the company reported segment revenue of 535.9 billion won in power devices, 231.2 billion won in distribution equipment and 159.9 billion won in rotating machinery, leaving power devices as the largest contributor.

In that quarter power devices grew 10.7% year on year on global grid replacement demand and wider overseas sales of high-voltage circuit breakers, while distribution equipment rose 20.2% on higher supply to domestic semiconductor projects.

Rotating machinery declined from the prior quarter due to seasonality in marine products but was still up 9.5% year on year.

The customer base spans North American utilities, hyperscaler data center projects, domestic semiconductor investment and shipbuilding, and on July 2, 2026 the company signed a framework agreement with a global big tech firm for long-term supply of distribution and power equipment worth up to 1,121.2 billion won.

Its core production bases are Ulsan and Montgomery, Alabama, with the first Alabama plant reported to be running at full capacity. Domestically it competes with Hyosung Heavy Industries and LS Electric, while ABB, Siemens Energy and GE Vernova target the same markets globally.

Among the three Korean players, its 765kV-class extra-high-voltage transformer capability and North American local production track record are cited as differentiators, supported by a supply history in North America dating back to 2000.

Earnings trend

Quarterly revenue · Operating profit

₩906.2B₩209.1B25Q2₩995.4B₩247.1B25Q3₩1.2T₩320.9B25Q4₩1T₩258.3B26Q1₩1.1T₩287B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩2.1T₩133B2022₩2.7T₩315.2B2023₩3.3T₩669B2024₩4.1T₩995.3B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩906.2B	₩209.1B	23.1%
2025Q3	₩995.4B	₩247.1B	24.8%
2025Q4	₩1.2T	₩320.9B	27.6%
2026Q1	₩1T	₩258.3B	24.9%
2026Q2	₩1.1T	₩287B	25.1%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩2.1T	₩133B	₩162.5B	6.3%	19.8%	193.0%
2023	₩2.7T	₩315.2B	₩259.2B	11.7%	24.7%	175.3%
2024	₩3.3T	₩669B	₩501.6B	20.1%	33.4%	151.8%
2025	₩4.1T	₩995.3B	₩732.6B	24.4%	36.1%	134.6%

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

On confirmed figures, revenue expanded for three consecutive years from 2,104.5 billion won in 2022 to 2,702.8 billion won in 2023, 3,322.3 billion won in 2024 and 4,079.5 billion won in 2025.

Over the same period operating profit rose from 133.0 billion won to 315.2 billion, 669.0 billion and 995.3 billion won, lifting the operating margin from 6.3% to 11.7%, 20.1% and 24.4%.

Net profit attributable to owners was 732.6 billion won in 2025, extending the earnings expansion from 501.6 billion won in 2024 and 259.2 billion won in 2023.

The quarterly path points the same way: from revenue of 906.2 billion won and operating profit of 209.1 billion won in the second quarter of 2025 to 1,163.2 billion won and 320.9 billion won in the fourth quarter of 2025, followed by 1,036.5 billion won and 258.3 billion won in the first quarter of 2026 and 1,141.8 billion won and 287.0 billion won in the second quarter of 2026.

Translated into quarterly operating margins, the level rose from 23.1% in the second quarter of 2025 to 27.6% in the fourth quarter of 2025, then held in the 24-25% range through the first half of 2026.

Management attributed the second-quarter 2026 profit expansion to improved power transformer profitability in North America and other major overseas markets, plus sharply better distribution equipment profitability led by switchgear for domestic semiconductor projects.

Cash flow shifted structurally, with operating cash flow moving from negative 124.1 billion won in 2022 and negative 22.4 billion won in 2023 to 1,033.7 billion won in 2024 and 959.6 billion won in 2025.

The balance sheet also improved, as the debt-to-equity ratio fell from 193.0% in 2022 to 175.3%, 151.8% and 134.6% in the following years, with total equity of 2,032.9 billion won at end-2025.

That said, combined revenue over the most recent four quarters, from the third quarter of 2025 through the second quarter of 2026, was roughly 4,336.9 billion won, meaning the annualized base is already in the low 4 trillion won range and the slope of growth could flatten until new capacity converts into revenue.

Industry analysis

End-market demand is being shaped by the overlap of AI data center investment and replacement of aging power grids in the United States.

The International Energy Agency projected global data center electricity consumption more than doubling from 415TWh in 2024 to 945TWh in 2030, with data centers accounting for roughly half of the increase in total US power demand over that period.

The supply side shows a clear bottleneck: data centers can be built in 18 to 24 months, while transmission networks and substations take three to seven years, and lead times for large power transformers have reportedly stretched to as long as four years.

Wood Mackenzie forecast the US power equipment market growing from around 20 billion dollars to roughly 65 billion dollars by 2030.

In the domestic competitive landscape, the combined order backlog of Hyosung Heavy Industries, HD Hyundai Electric and LS Electric was tallied at about 37.4 trillion won at the end of the first quarter of 2026, and HD Hyundai Electric's own backlog was 7.888 billion dollars, of which North America accounted for 5.456 billion dollars, or roughly 70%.

Rivals are adding capacity into the same market, however, with Hyosung Heavy Industries expanding its Memphis plant, LS Electric widening local production lines, and global players such as ABB, Siemens Energy and GE Vernova also building out facilities.

The center of gravity for growth is also broadening from standalone extra-high-voltage transformers toward gas-insulated switchgear, low- and medium-voltage distribution equipment, and power control and automation solutions.

Outlook

The most concrete guidance the company has filed is its order target. On July 6, 2026 it raised the annual order target 22.8%, from 4.222 billion dollars to 5.185 billion dollars, explaining that the revision reflected wider order expectations across power transformers, distribution equipment and rotating machinery.

First-half cumulative orders were 3.237 billion dollars and end-second-quarter backlog was 8.49 billion dollars, providing a baseline for tracking progress against that target. Capacity expansion runs on two tracks.

The second plant in Montgomery, Alabama carries roughly 200 million dollars of investment and targets completion in April 2027, at which point the company plans to lift extra-high-voltage transformer capacity by 50% and add 765kV-class testing and production facilities.

Expansion at the Ulsan extra-high-voltage transformer plant is proceeding in parallel, and Mirae Asset Securities said in a July 2026 report that it expects Ulsan to contribute to revenue from the second half of 2027 after completion in the fourth quarter of 2026, and Alabama from the second half of 2028 after completion in the first quarter of 2027.

On product mix, the data center share is rising: the roughly 1.1 trillion won of big tech orders booked in the second quarter of 2026 are scheduled for delivery in 2027 and 2028, and the company said talks continue over 2029-2030 volumes.

Management said it expects stable growth to continue in the second half as data center-driven power demand converts into distribution and rotating machinery orders.

Still, the company's stated policy of selective, profitability-focused order intake implies trade-offs between volume and margin, so order growth rates cannot be translated directly into earnings.

Valuation

PER

30.2×

PBR

11.4×

ROE

43.7%

EPS

₩23,637

BPS

₩62,650

Dividend per share

₩5,350

As earnings have expanded, the multiples the market assigns have risen alongside them, and the stock trades at a fairly thick premium to book value.

Earnings-based multiples also sit above the levels Korean power equipment names commanded early in the cycle, which reads as the market embedding some of the end-second-quarter 2026 backlog and post-expansion capacity into earnings expectations.

The company has a quarterly dividend framework and disclosed a quarterly dividend resolution on July 28, 2026, but the investment allocated over the same period to the second Alabama plant and Ulsan expansion is far larger, leaving the dividend yield at a low level.

Brokerage views are not especially divided: Mirae Asset Securities, in a July 2026 coverage initiation report, set a target price of 1.3 million won and said it applied the average forward earnings multiple of global peers producing 800kV-class extra-high-voltage transformers, while Yuanta Securities analyst Son Hyun-jung maintained a 1.45 million won target price in a June 11, 2026 report and assessed the company as having the clearest extra-high-voltage transformer competitiveness among Korean power equipment makers.

These are those brokerages' views, not KOSAI's. Ultimately, judging the current multiple depends on how much of the new capacity converts into actual revenue and profit from 2027 onward, making quarterly backlog and adherence to completion schedules the key items to verify.

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

Backlog has extended earnings visibility

Order backlog at the end of the second quarter of 2026 was 8.49 billion dollars, up 29.6% year on year and 7.6% quarter on quarter. New orders in the quarter totaled 1.44 billion dollars, a 44.6% year-on-year increase, bringing first-half intake to 3.237 billion dollars.

The roughly 1.1 trillion won of big tech orders is scheduled for delivery across 2027 and 2028, meaning part of the next two years' volume is already locked in. The company also raised its annual order target to 5.185 billion dollars.

Margins are holding around 25%

The annual operating margin rose from 6.3% in 2022 to 24.4% in 2025. On a quarterly basis it held around 24.9% in the first quarter of 2026 and 25.1% in the second, after 27.6% in the fourth quarter of 2025.

Management cited improved North American power transformer profitability and better margins on switchgear for domestic semiconductor projects. Mirae Asset Securities, in a July 2026 report, assessed the company's operating margin as far superior to that of global peers.

Local production capacity build-out in North America

The company is building a second plant at its Montgomery, Alabama production unit with roughly 200 million dollars of investment, targeting completion in April 2027 and a 50% increase in extra-high-voltage transformer capacity.

It also plans to add 765kV-class testing and production facilities to serve US extra-high-voltage transmission demand. The first Alabama plant is reported to be running at full capacity, limiting incremental volume absorption without the expansion.

As US data center and grid investment widens, securing local production capacity is being cited as a core element of order competitiveness.

Bear factors

Possible deceleration in growth rates

Revenue grew 22.8% year on year in 2025, but second-quarter 2026 revenue rose only 10.2% from the prior quarter, and first-quarter 2026 revenue was down from the fourth quarter of 2025. The company said total new orders fell in the second quarter of 2026 because of a high base in the first quarter.

With Mirae Asset Securities projecting the Alabama and Ulsan expansions to contribute to revenue only from the second half of 2028 and the second half of 2027 respectively, existing utilization sets the ceiling on growth in the interim. The assumption of sustained high growth rates requires verification.

Simultaneous rival expansion and easing supply bottlenecks

Hyosung Heavy Industries is expanding its Memphis extra-high-voltage transformer plant, LS Electric is widening its US production footprint, and global players including ABB, Siemens Energy and GE Vernova are adding capacity.

Today's high margins rest on delivery delays and supply shortage, so pricing power could shift once global expansions come online together.

The rise in the three Korean players' combined backlog to about 37.4 trillion won at the end of the first quarter of 2026 evidences a strong market but also signals future supply additions. This calls for a judgment on where in the cycle the industry stands.

High share price volatility

According to Korea Exchange data as of early June 2026, HD Hyundai Electric's share price fell 37.39% over the preceding month, while LS Electric and Hyosung Heavy Industries dropped 34.69% and 30.54% respectively.

Press coverage at the time pointed to a rotation of flows into semiconductor names and profit-taking after a sharp first-half run. That such a drawdown occurred even with solid industry conditions and backlog implies multiple swings weigh heavily on the share price. The pattern of volatility widening around earnings dates also warrants attention.

Risk factors

Regulatory and legal risk

Press reports in 2026 indicated that arrest warrants were sought for staff at the three Korean power equipment makers, HD Hyundai Electric, Hyosung Heavy Industries and LS Electric, over alleged bid rigging on domestic contracts worth roughly 670 billion won.

Commentators noted that prolonged legal proceedings could affect corporate credibility and domestic order intake. Any fine amount or final disposition needs to be confirmed through formal filings. Potential restrictions on participation in domestic public tenders are the practical transmission channel.

Currency and tariffs

With a high share of revenue from North America, a stronger won could reduce the won-converted profit on dollar-denominated sales, as observers have noted.

Mirae Asset Securities said in a July 2026 report that the Section 232 tariff framework effective from April 2026 should slightly lower cost of goods sold, but because much of the earlier tariff burden had been passed on to customers, the incremental profit benefit may be limited.

Tariff policy remains subject to change at the discretion of the US administration. Both currency and tariffs are exogenous factors outside the company's control.

Execution risk on capacity expansion

Completion of the second Alabama plant is targeted for April 2027 and the Ulsan expansion is projected for the fourth quarter of 2026; delays could strain delivery schedules against orders already booked.

It should also be noted that transformer plants typically take about a year from initial revenue recognition to full ramp-up. When orders are secured ahead of capacity, early commissioning of facilities becomes a real determinant of results. Completion and start-up timing need to be verified through filings and IR materials.

What to watch next

Late October 2026
Third-quarter 2026 results. The key items are whether the 25.1% operating margin cited for the second quarter of 2026 holds, and how much third-quarter new orders add to first-half intake of 3.237 billion dollars against the 5.185 billion dollar annual target.
Fourth quarter of 2026
Whether the Ulsan extra-high-voltage transformer plant expansion is completed. Mirae Asset Securities projected in a July 2026 report that Ulsan would be completed in the fourth quarter of 2026 and contribute to revenue from the second half of 2027; the actual completion date should be verified via filings and IR materials.
January-February 2027
Disclosure of full-year 2026 results and 2027 order and revenue targets. Alongside whether the 5.185 billion dollar 2026 order target was met, the level at which 2027 targets are set will indicate how the company reads its position in the cycle.
Around April 2027
Completion of the second Alabama plant. Since the plan calls for a 50% increase in extra-high-voltage transformer capacity plus added 765kV-class testing and production facilities, adherence to schedule and initial operating conditions are prerequisites for revenue recognition from 2028 onward.
Ongoing, as filed
Progress and outcome of proceedings related to the domestic bid-rigging allegations. Once fine amounts or any tender participation restrictions are confirmed in filings, they will provide a basis for assessing the practical impact on the domestic order book.

Overall view

HD Hyundai Electric's confirmed results trace a path in which both scale and margin expanded within three years, from 2022 revenue of 2,104.5 billion won and operating profit of 133.0 billion won to 2025 revenue of 4,079.5 billion won and operating profit of 995.3 billion won.

That continued into the first half of 2026, with first-quarter revenue of 1,036.5 billion won and operating profit of 258.3 billion won, and second-quarter revenue of 1,141.8 billion won and operating profit of 287.0 billion won, keeping the quarterly operating margin around 25%.

On the balance sheet side, operating cash flow swung from negative in 2022 and 2023 to roughly 1 trillion won in 2024 and 2025, while the debt-to-equity ratio fell from 193.0% to 134.6%.

In end markets, demand from AI data centers overlapping with US aging-grid replacement continues, and in July 2026 the company raised its annual order target 22.8% to 5.185 billion dollars while holding an order backlog of 8.49 billion dollars at the end of the second quarter of 2026.

On the other side sit simultaneous capacity additions by domestic rivals and global players, currency and tariff variables, legal proceedings tied to domestic bid-rigging allegations, and a structure in which existing utilization caps growth until new plants are completed.

The multiples the market assigns sit at a thick premium to book value, making it a matter for verification how much of the secured backlog converts into actual revenue and profit from 2027 onward. 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.