Taihan Electric Wire is expected to see mid- to long-term earnings improvement, driven by expanding U.S. power grid investment and growth in its submarine cable business. The analysis comes as the point at which North American transmission grid investment translates into actual equipment orders draws near, and the company's strengthened submarine cable production and installation capabilities are also regarded as a pillar of earnings growth.

On the 27th, KB Securities maintained its 'Buy' investment opinion on Taihan Electric Wire and raised its target price from the existing 34,000 won to 39,000 won, a roughly 14.7% increase. Based on the closing price of 28,200 won on the 26th, the stock has upside potential of about 38.3% to the target price.

FERC 'Order 2023' Seen as a Catalyst for Easing North American Grid Bottlenecks

The growth potential of the North American power grid market was a key factor reflected in this target price adjustment. In the United States, the front-of-the-meter (FTM) grid connection process for linking new power plants to the grid has in some cases taken more than five years due to permitting hurdles and supply bottlenecks in transmission equipment.

KB Securities analyzed that the implementation of the U.S. Federal Energy Regulatory Commission's (FERC) 'Order 2023' will serve as an opportunity to ease these bottlenecks. The grid connection review method is shifting from a first-come, first-served basis to one that considers project readiness, and cluster-based reviews are expanding in place of individual reviews, potentially shortening the time needed for grid connections. Accordingly, the brokerage sees order expansion for transmission equipment companies becoming visible from 2027.

From Production to Installation... Submarine Cable Business Expansion

Taihan Electric Wire's submarine cable business expansion was also cited as a core growth driver. The company has secured not only submarine cable production facilities but also installation capabilities and cable-laying vessels, building a business structure spanning from production to installation. In particular, when the second submarine cable plant in Dangjin is completed in 2027, production capacity for export (external network) submarine cables is expected to be further strengthened. The company recently also showcased its HVDC and submarine cable technologies as well as production and installation infrastructure at CIGRE 2026.

Operating Profit of 244 Billion Won Expected This Year... Profitability Improvement Also Expected

Earnings forecasts were raised as well. KB Securities expects Taihan Electric Wire to post revenue of 4.53 trillion won and operating profit of 244 billion won this year, and revenue of 5.048 trillion won and operating profit of 305.1 billion won next year. In particular, extra-high-voltage and submarine cable revenue is estimated to rise from 940 billion won this year to 1.302 trillion won next year.

Profitability improvement is also anticipated. KB Securities projects the operating margin to rise from 3.5% last year to 5.4% this year, 6.0% next year, and 6.7% in 2028. The analysis is that if new orders from expanding U.S. power grid investment and a rising share of high-value-added extra-high-voltage and submarine cables proceed simultaneously, top-line growth and profitability improvement can reinforce each other.

However, the speed at which North American grid investment converts into actual orders and revenue, as well as the profitability of large-scale projects, remain variables to be confirmed. Potential deterioration in financing conditions for big tech companies and ongoing technology-related lawsuits with competitors were also cited as risk factors.

[Stock prices may exhibit heightened volatility depending on corporate performance, industry conditions, merger terms, and market supply and demand. Securities firms' analyses and forecasts may differ from actual future results and do not guarantee returns on any specific stock. Before making investment decisions, it is necessary to comprehensively review the company's official disclosures, financial condition, and business progress. This article is not intended to solicit the purchase or sale of any specific stock. This article was written with AI assistance.]