Hyosung Heavy Industries (298040) is expected to maintain strong earnings growth in the second quarter, driven by robust orders for power equipment and the base effect in the construction sector.

■ Q2 Earnings Expected to Beat Market Consensus IBK Investment Securities estimated that Hyosung Heavy Industries' consolidated second-quarter sales would reach 1.9091 trillion won, up 25.2% year-on-year, while operating profit would surge 97.6% to 324.5 billion won. This is in line with previous estimates and represents a strong performance expectation that exceeds the market consensus (sales of 1.8172 trillion won and operating profit of 287.6 billion won).

■ Three Key Drivers Propelling Earnings The securities industry cited improvements in the heavy industry and construction sectors, as well as the global macroeconomic environment, as factors driving the earnings improvement.

• Heavy Industry Sector: Volumes deferred from the first quarter are being reflected in earnest, with increased demand for extra-high-voltage transformers and power equipment leading the earnings improvement.
• Construction Sector: The profitability improvement trend continues, aided by the base effect resulting from sluggish performance during the same period last year.
• Global Power Demand: The recent expansion of global power infrastructure investments and the increase in power demand driven by the rise of artificial intelligence (AI) data centers are also positive factors raising growth expectations. In particular, as the demand for power grid replacements and investments in power transmission and distribution facilities expand, mainly in North America, exports of high-value-added power equipment are on the rise.

■ Stock Price Reaction and Mid-to-Long-Term Outlook These positive market earnings expectations are also being reflected in the stock price. Hyosung Heavy Industries' stock price showed strong momentum, rising 5.61% compared to the previous trading day.

The securities industry believes that Hyosung Heavy Industries has secured a mid-to-long-term growth foundation based on its large order backlog, meaning that profitability improvements centered on power equipment will likely continue. If the expansion of global power infrastructure investments continues, the earnings momentum could be further strengthened.

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