[Feature] Daewon Cable Hits 97% Utilization Amid Surging AI Data Center Demand... But 'High PER and Convertible Bonds' Remain Variables

As expectations grow for power infrastructure investments in artificial intelligence (AI) data centers and the semiconductor industry, Daewon Cable is drawing market attention. While its production facilities are operating at near-full capacity, the valuation burden stemming from the recent steep stock price surge and the potential equity dilution from the issuance of convertible bonds (CB) are also cited as key variables that investors must consider together.

📌 Business Status and Market Expectations According to Daewon Cable's business report filed on the 5th, the company manufactures and sells power cables used for residential and industrial power supply, communication network construction, and electrical and electronic equipment as well as automobiles. Established in November 1969, the company was listed on the Korea Composite Stock Price Index (KOSPI) in May 1988 and also operates an automotive aluminum wheel business through a subsidiary. For reference, while some reports mention its competitiveness in transformers, its officially disclosed core businesses are power, communication, and automotive cables.

The market's high expectations are proven by performance figures. According to a report by DealSite citing data from Daewon Cable, demand for extra-high-voltage and distribution cables for AI data centers in the first quarter of this year surged by 235% compared to the same period last year. Supply volumes for automotive cables also increased by 12% during the same period. Accordingly, revenue from insulated wires, including automotive cables, expanded from 62.4 billion won in the first quarter of last year to 84.3 billion won in the first quarter of this year.

📌 Factory Utilization Rate at 97.22%... The Key to Profitability Improvement is 'Raw Material Prices' The increase in demand is directly leading to higher production volumes. Based on first-quarter data analyzed by DealSite, the average utilization rate of Daewon Cable's wire business factories reached 97.22%, indicating that most of the existing facilities are in operation.

However, a high utilization rate does not unconditionally guarantee improved profitability. A cable company's profitability is determined by the margin structure among raw material prices—such as copper, aluminum, polyethylene (PE), and polyvinyl chloride (PVC)—exchange rates, and product selling prices. Therefore, to grasp future performance direction, the key indicator is not simply the increase in sales volume, but how well the rise in raw material prices is reflected in supply unit prices.

📌 What is the Real Purpose of the 50 Billion Won Convertible Bond Issuance? To respond to increasing volumes and raw material demand, Daewon Cable has also turned to external fundraising. According to a report by Maeil Business Newspaper based on data from the Financial Supervisory Service's Electronic Disclosure System (DART), the company issued its 27th convertible bonds worth 50 billion won in June. Of the raised funds, 34.5 billion won was allocated for operating capital and 15.5 billion won for debt repayment.

While some sources explained that the entire 34.5 billion won would be invested in facility expansion, disclosure-based data clearly states the purpose of that amount as 'operating capital.' According to a report by Data Investment, these funds will be used to purchase raw materials such as copper, PE, and PVC. The exact scale and timing of future facility expansions should be confirmed through separate capital expenditure disclosures or subsequent business reports.

Additionally, the potential conversion of these convertible bonds into shares in the future must be examined. The conversion price is 11,650 won per share, and the conversion claim period spans from June 18, 2027, to May 18, 2029. If fully converted, 4,291,845 shares could be issued, accounting for 5.04% of the total existing issued shares. If the stock price continues to trade above the conversion price, the potential increase in the number of shares and the resulting equity dilution factor could be highlighted in the market.

📌 Market Cap Exceeds 1 Trillion Won... Stock Price Already Factors In Performance The stock price has already largely reflected expectations for power infrastructure growth. According to a report by Top Star News citing Naver Pay Securities data, Daewon Cable closed at 13,790 won on the 4th, up 5.19% from the previous trading day. Trading volume that day reached 14,986,967 shares, with a trading value of 211.398 billion won, bringing its market capitalization to 1.0813 trillion won.

According to the same data, Daewon Cable's Price Earnings Ratio (PER) stood at 86.73 times, significantly exceeding the industry average PER of 44.27 times. Although there is room for PER improvement depending on the pace of future profit growth, the prevailing interpretation is that expectations for the expansion of AI data centers and power grid investments are already priced into the current stock.

💡 Investment Strategy: Checking 'Performance' and 'Disclosures' Essential Over Thematic Approaches The demand for AI data centers, semiconductor clusters, and the replacement of aging power grids serves as a powerful long-term catalyst supporting the expansion of cable demand. However, given that Daewon Cable's stock price is running ahead of its actual performance, investors should track specific performance directions rather than being swept away by thematic market movements.

Investors should sequentially verify through future earnings announcements, order book disclosures, and convertible bond conversion trends whether ▲the high factory utilization rate translates into actual operating profit increases, ▲the rise in raw material prices is smoothly passed on to supply unit prices, and ▲the raised operating capital contributes to production expansion.

[This article is provided as reference material for investment decisions and does not recommend the purchase or sale of any specific stock. The responsibility for stock investments lies with the investor. This article was written with AI assistance.]