KOSPIElectrical Equipment298040

Hyosung Heavy Industries

₩2,790,000▼ 1.13%2026-10-02 close

Market Cap

₩26T

Turnover

₩67.8B

Volume

20K

Shares out.

9.3M

PER

43.5×

PBR

9.8×

EPS

₩62,830

Dividend Yield

0.27%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩7,500 per share · Prices as of the 2026-10-02 close

Report overview

North American Backlog vs. Raised Expectations

A shortage of ultra-high-voltage power equipment in the U.S. has lifted both the order backlog and operating margin, but market expectations have risen alongside them.

1
In 2025 revenue reached KRW 5,968.5bn and operating profit KRW 747.0bn for a 12.5% operating margin, a sharp change in margin structure from 4.1% in 2022.
2
In Q2 2026 revenue was KRW 1,687.0bn and operating profit KRW 264.3bn, a 15.7% operating margin and the highest profitability among the reported quarters.
3
In its July 31, 2026 preliminary release, the company disclosed a backlog of KRW 17.5tn (up 63% year on year) and raised its annual order target from KRW 8.4tn to KRW 12tn.
4
The Memphis, Tennessee plant is adding USD 157m of investment to expand capacity by more than 50% by 2028, while a gas circuit breaker joint venture with a Quanta Services subsidiary has been set up in Pennsylvania.
5
The debt-to-equity ratio fell from 325.4% in 2022 to 190.3% in 2025, but remains high in absolute terms while large capacity investments proceed in parallel.

Business structure

Hyosung Heavy Industries is organized into a heavy industries division handling power equipment and a construction division covering housing and plants.

The heavy industries core lineup centers on ultra-high-voltage transformers, gas circuit breakers and gas-insulated switchgear, complemented by HVDC systems, energy storage and grid operation solutions.

Production bases include the Changwon plant in Korea, the Memphis plant in Tennessee and an Indian subsidiary; the company describes Memphis as the only facility in the U.S. able to design and produce 765kV ultra-high-voltage transformers.

The company says its Indian arm, Hyosung T&D India, holds more than 50% share of the local ultra-high-voltage breaker market and about 90% in the 800kV-and-above segment. The customer base is broadening from traditional utilities and transmission operators toward AI data center developers.

Money Today reported on September 2, 2026 that major customers of the U.S. entity HICO America now include Intersect Power (13%), SoftBank (9%), LS Power (5%) and xAI (3%).

Regionally, North America is expanding fast; coverage citing a Daishin Securities report dated August 4, 2026 put the U.S. share of Q2 2026 heavy industries revenue of KRW 1,137.0bn at 38%, versus 63% of new orders and 57% of backlog.

In construction, the company said it maintains a risk-management stance built on selective bidding and higher-quality projects. Competitively, it coexists with HD Hyundai Electric and LS Electric at home and with established global players such as Hitachi Energy and Siemens Energy abroad.

Earnings trend

Quarterly revenue · Operating profit

₩1.5T₩164.3B25Q2₩1.6T₩219.8B25Q3₩1.7T₩260.5B25Q4₩1.4T₩152.3B26Q1₩1.7T₩264.3B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩3.5T₩143.2B2022₩4.3T₩257.8B2023₩4.9T₩362.5B2024₩6T₩747B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.5T	₩164.3B	10.8%
2025Q3	₩1.6T	₩219.8B	13.5%
2025Q4	₩1.7T	₩260.5B	14.9%
2026Q1	₩1.4T	₩152.3B	11.2%
2026Q2	₩1.7T	₩264.3B	15.7%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩3.5T	₩143.2B	₩29.1B	4.1%	3.0%	325.4%
2023	₩4.3T	₩257.8B	₩116B	6.0%	10.7%	288.9%
2024	₩4.9T	₩362.5B	₩222.6B	7.4%	11.7%	202.5%
2025	₩6T	₩747B	₩519.9B	12.5%	22.1%	190.3%

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 four-year annual trend shows top line and margin expanding together. Revenue rose from KRW 3,510.1bn in 2022 to KRW 4,300.6bn in 2023, KRW 4,895.0bn in 2024 and KRW 5,968.5bn in 2025, while operating profit grew from KRW 143.2bn to KRW 257.8bn, KRW 362.5bn and KRW 747.0bn.

Over the same span the operating margin climbed from 4.1% to 6.0%, 7.4% and 12.5%, meaning profit grew faster than sales. Net profit attributable to owners also expanded from KRW 29.1bn in 2022 to KRW 519.9bn in 2025, extending the profit recovery.

On the balance sheet, total equity rose from KRW 1,103.2bn in 2022 to KRW 2,489.7bn in 2025 and the debt-to-equity ratio fell from 325.4% to 190.3%, while operating cash flow normalized from negative KRW 67.1bn in 2022 to KRW 454.7bn, KRW 412.1bn and KRW 493.0bn in 2023-2025.

Quarterly, results moved from KRW 1,525.3bn revenue and KRW 164.3bn operating profit in Q2 2025 to KRW 1,743.0bn and KRW 260.5bn in Q4 2025, dipped to KRW 1,358.2bn and KRW 152.3bn in Q1 2026, then rebounded to KRW 1,687.0bn and KRW 264.3bn in Q2 2026.

The operating margin recovered from 11.2% in Q1 2026 to 15.7% in Q2 2026, showing meaningful quarter-to-quarter volatility.

On that swing, LS Securities noted in an April 27, 2026 report that U.S.-bound breaker volumes were booked as in-transit inventory in Q1 and recognized as Q2 revenue, creating an inter-quarter operating profit deferral of roughly KRW 40bn.

For the most recent four quarters (Q3 2025 through Q2 2026), combined revenue was about KRW 6,412.3bn and operating profit about KRW 896.9bn, putting the margin near the 14% area.

Industry analysis

The end market is in a supplier-favorable phase where AI data center buildouts overlap with aging grid replacement. Company materials project the U.S. transformer market growing about 7.7% annually, from roughly USD 12.2bn in 2024 to about USD 25.7bn by 2034.

Newdaily reported on August 13, 2026 that lead times for some equipment exceed two years and can reach four years for high-capacity transformers, and that U.S. demand for generator step-up transformers has risen 274% since 2019.

Supply bottlenecks stem not only from plant capacity but also from skilled labor and qualification timelines, which analysts see as structurally slow to resolve. Policy is another variable. The U.S.

Department of Energy's Office of Electricity said on August 10, 2026 that it would pursue a program of up to USD 375m to strengthen domestic supply chains for critical grid equipment.

EBN also reported that President Trump signed an executive order on August 26, 2026 declaring a national emergency to protect the bulk-power system, banning acquisition, import and installation of foreign equipment deemed a security risk, and that expectations have grown that firms with local production could gain an edge over export-driven peers.

Rivals are localizing too: HD Hyundai Electric is reported to be building a second Alabama plant targeted for completion in April 2027, which would lift capacity by 50% and add 765kV-class testing and production facilities.

In short, the demand cycle is expanding, but competition in U.S.-based capacity is set to intensify over the next several years.

Outlook

Based on confirmed facts, the company's direction is set toward expanding North American production and upgrading product mix.

In its July 31, 2026 preliminary release, the company raised its annual new-order target from KRW 8.4tn to KRW 12tn on the back of KRW 7,498.1bn in first-half orders, and said end-Q2 backlog stood at KRW 17.5tn, up 63% year on year.

Money Today reported on September 2, 2026 that North America accounted for 57% of the Q2 backlog versus 44% a year earlier, and that orders now extend to 765kV volumes slated for delivery in 2031.

On capacity, an additional USD 157m investment in Memphis was announced to raise ultra-high-voltage transformer capacity by more than 50% by 2028, with cumulative investment since acquisition put at about USD 300m.

In breakers, subsidiary Hyosung HICO was reported to have signed an agreement with a Quanta Services subsidiary to establish the gas circuit breaker joint venture HYOSUNG HICO BREAKER, LLC, with production starting in October at a Pennsylvania plant.

Domestically, a dedicated voltage-source HVDC transformer plant worth about KRW 330bn is under construction in Changwon, targeted for completion in July 2027.

The company has also said it plans to complete validation of a 2GW-class voltage-source HVDC system by 2027 to address large domestic grid projects such as the roughly KRW 11tn West Coast Energy Highway.

That said, all of these timelines can shift revenue recognition depending on execution, certification and order timing, and second-half 2026 results have not yet been finalized through disclosure.

Valuation

PER

43.5×

PBR

9.8×

ROE

25.3%

EPS

₩62,830

BPS

₩277,857

Dividend per share

₩7,500

The current share price sits at a level that already embeds much of the earnings improvement seen over four straight years of profit expansion and an operating margin that has risen from the low single digits to the mid-teens.

The price-earnings multiple is above the average for Korea's electrical equipment sector, and the price-to-book multiple carries a large premium to net assets, so the justification for those multiples rests on how much of the backlog converts into actual revenue and margin.

Dividends have grown only modestly even amid rising profits, leaving the dividend yield below the market average and making share-price movement the dominant driver of total return.

For reference, Daishin Securities said in an August 4, 2026 report that it cut its target price from KRW 4,800,000 to KRW 4,200,000 to reflect the recent share-price correction while maintaining a 'buy' rating, and estimated 2026 revenue of KRW 7,333.0bn and operating profit of KRW 1,182.0bn.

That report explained it applied a target price-earnings multiple of 19.5 times on projected 2029 earnings. This is one brokerage's view, and the validity of the multiple ultimately depends on the expansion of North American revenue and delivery against the capacity expansion schedule.

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

Local North American production and product mix

The company states that Memphis is the only U.S. facility able to design and build 765kV ultra-high-voltage transformers, and that it has held the top share in that market since the early 2010s, supplying close to half of the 765kV transformers installed on the U.S. grid.

Some observers argue that tighter U.S. control over foreign grid equipment could favor players with local production over export-focused peers. Ultra-high-voltage products carry high entry barriers and relatively higher pricing and margins. The 15.7% operating margin in Q2 2026 shows this mix shift feeding through to earnings.

Backlog visibility

The company said end-Q2 2026 backlog stood at KRW 17.5tn, up 63% year on year. According to Money Today's September 2, 2026 report, orders now extend to volumes scheduled for delivery in 2031, against an industry average lead time of two to three years.

Power equipment is a capital-goods business where revenue recognition follows orders by several years, so backlog serves as a base for future sales. Backlog is not confirmed profit, however, and realized margins can vary with costs, currency and project execution.

Customer diversification and lineup expansion

Reporting indicates AI data center players have entered the U.S. entity's major customer list, broadening a base previously centered on utilities.

Overseas, it has been confirmed that the company will supply 400kV gas-insulated switchgear to the Hyderabad Chandanvelly hyperscale data center park in India and signed a long-term supply contract worth about KRW 310bn with Australian transmission operator AusNet.

A joint venture extending U.S. local production from transformers into breakers has also been established. These shifts reduce reliance on a single product or region, which matters for business stability.

Bear factors

Elevated expectations and multiple burden

With both the price-earnings and price-to-book multiples trading above sector averages, the scope for multiple compression is wider if results fail to track expectations. Daishin Securities said in its August 4, 2026 report that it lowered its target price to reflect the recent sharp share-price correction.

Coverage citing the same report referenced a broad utilities-sector correction and interest-rate variables. In other words, sector flows and rates unrelated to company-specific results can also drive share-price volatility.

Trade and tariff variables

On August 11, 2026 the U.S. Department of Commerce announced final anti-dumping duty results on Korean liquid-filled transformers, assigning 0% to HD Hyundai Electric and Iljin Electric and 4.32% to LS Electric and Hyosung Heavy Industries.

Hyosung Heavy Industries said the rate was unchanged from before and that U.S. export volumes during the review period were small, so the impact would not be material. Because annual administrative reviews recur, rates could change again in future determinations.

Layered with other trade measures such as reciprocal tariffs, cost pressure could accumulate on the export channel for domestically produced units.

Financial leverage and investment burden

The debt-to-equity ratio fell from 325.4% in 2022 to 190.3% in 2025, but remains high in absolute terms, with total liabilities of KRW 4,738.2bn in 2025.

At the same time, large investments are proceeding in parallel, including the additional Memphis expansion of USD 157m and the dedicated Changwon HVDC plant of about KRW 330bn targeted for July 2027 completion.

Operating cash flow of KRW 493.0bn in 2025 is solid, but with capital spending rising, cash flow and borrowing structure warrant joint monitoring. A slowdown in construction would add difficulty to managing funding needs and profitability.

Risk factors

Policy and regulation

The executive order on the bulk-power system signed by President Trump on August 26, 2026 was reported to ban acquisition, import and installation of foreign equipment deemed a security risk, and to allow requirements for isolation, monitoring or replacement of already-installed equipment.

Depending on how covered scope and criteria are specified, it could favor firms with high local production or trigger extra certification and localization costs. The U.S. Department of Energy's domestic supply-chain program is also cited as a reason Korea's three main players must weigh further localization. Detailed implementing rules remain in process, leaving uncertainty.

Demand concentration

Reports put the U.S. share at 63% of new orders in Q2 2026 and 57% of backlog. That is both a growth engine and a sign of greater exposure to one region's economy and policy.

Customer composition now reflects AI data center developers, whose capital spending plans are sensitive to funding conditions and to changes in power tariffs and interconnection rules. If data center investment moderates, new-order flow could become more volatile.

Execution and revenue recognition

The gap between an 11.2% operating margin in Q1 2026 and 15.7% in Q2 2026 shows how much timing of revenue recognition can move quarterly earnings. LS Securities said in an April 27, 2026 report that timing differences on U.S.-bound breaker volumes created an inter-quarter operating profit deferral of roughly KRW 40bn.

Ramping new lines to stable output, obtaining qualifications and securing skilled labor also remain schedule risks. In construction, cost inflation and site-specific conditions leave the possibility of provisions.

What to watch next

October 2026
The joint venture HYOSUNG HICO BREAKER, LLC with a Quanta Services subsidiary was reported to begin production at a Pennsylvania plant in October. The actual start date and early orders and deliveries will indicate progress on the strategy of bundling transformers and breakers within the U.S.
Around late October 2026
In the Q3 2026 results, it is worth checking revenue and operating margin along with how far cumulative new orders have filled the raised KRW 12tn annual target. The key question is whether the 15.7% operating margin of Q2 2026 holds or swings again on quarterly recognition timing.
Q4 2026
Watch for the implementing details of the U.S. bulk-power system executive order signed on August 26, 2026 and the detailed notice for the Department of Energy's grid supply-chain program of up to USD 375m. The crux is how covered scope and domestic-content preferences affect the value of local production.
First half of 2027
The dedicated voltage-source HVDC transformer plant in Changwon, with total investment of about KRW 330bn, is slated for completion in July 2027. Reviewing that alongside the order schedule for the roughly KRW 11tn West Coast Energy Highway and progress on 2GW-class voltage-source HVDC validation will help gauge real momentum in the domestic HVDC business.
Annual review cycle from 2027
The anti-dumping rate finalized in August 2026 (4.32% for Hyosung Heavy Industries) was reported to apply until the next annual review result. How the rate is adjusted in the next preliminary and final determinations directly affects the cost of the U.S. export channel for Changwon-produced units.

Overall view

Over the past four years Hyosung Heavy Industries saw revenue rise from KRW 3,510.1bn to KRW 5,968.5bn and its operating margin improve from 4.1% to 12.5%, an interval in which scale and profitability advanced together.

In Q2 2026 it posted revenue of KRW 1,687.0bn and operating profit of KRW 264.3bn for a 15.7% margin, and the company disclosed a KRW 17.5tn backlog while raising its annual new-order target to KRW 12tn.

The growth axis has clearly shifted to North America, supported by execution plans including the Memphis expansion, the Pennsylvania breaker joint venture and the dedicated Changwon HVDC plant.

On the other side, leverage has come down but remains high in absolute terms while large investments run in parallel, and anti-dumping duties and U.S. domestic-production preferences remain variables whose direction is hard to predict.

The recent swing in quarterly operating margin between the 11% and 15% ranges is a reminder that revenue-recognition timing still drives significant volatility.

The share price trades on multiples that already embed much of this earnings improvement, so the pace at which backlog converts into actual revenue and margin becomes the central question ahead. This report is for informational purposes and contains no buy or sell recommendation or 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.