An analysis has emerged that Hyosung Heavy Industries is broadening its customer base, previously centered on utilities, into the artificial intelligence (AI) data center sector on the back of expanding U.S. power grid investment. The company is also being evaluated as having longer-term order visibility based on its local U.S. production system and competitiveness in extra-high-voltage power transmission equipment.

SK Securities Maintains 'Buy' Rating and Target Price of 4,000,000 Won

On the 24th, SK Securities maintained a 'Buy' rating and a target price of 4,000,000 won for Hyosung Heavy Industries. Researcher Nam Min-sik of SK Securities analyzed that while U.S. utility and power grid investments form the foundation of mid- to long-term performance, AI data center-related demand is being added as an additional growth axis.

In particular, it was noted that the customer composition of Hyosung Heavy Industries' U.S. sales subsidiary Hyosung HiCo America is becoming more diverse than in the past, when it was centered on power companies. By major revenue source, Constellation accounted for the highest share at 15%, followed by Intersect Power at 13%, Dominion and SoftBank at 9% each, and PSE and AEP at 8% each. LS Power recorded 5%, Southern 4%, and xAI around 3%.

AI Data Center Demand: A Separate Additional Growth Axis

The fact that AI data center-related customers have begun to be included among the revenue sources of the U.S. sales subsidiary is interpreted as meaning that additional demand, separate from existing transmission grid investment, is forming. This is because if AI data centers, which consume large amounts of power, increase rapidly, demand for extra-high-voltage power equipment such as transformers and circuit breakers is likely to expand along with it.

Hyosung Heavy Industries' securing of a local production base in the U.S. was also evaluated as a competitive strength. SK Securities explained that the company produces extra-high-voltage transformers at its Memphis plant in the U.S. and is enhancing its responsiveness to the transmission market by utilizing local production capacity.

Negotiations Extending to Post-2030 Volumes... Order Backlog Extending Longer Term

Another point to watch is that the time horizon of the order backlog is lengthening. The analysis is that U.S. utility companies are negotiating with suppliers on volumes even beyond 2030, forming not only short-term orders but also supply schedules spanning long periods.

Large-scale orders are also continuing in the extra-high-voltage segment. SK Securities mentioned that Hyosung Heavy Industries has secured orders worth 787 billion won, centered on 765kV-class transformers and reactors, in evaluating its competitiveness in the transmission market.

Grid Investment as the Fundamental Axis, Data Centers as Additional Demand

Looking at Hyosung Heavy Industries' business structure, rather than explaining its growth potential by AI data centers alone, it is closer to a form in which existing U.S. transmission grid investment and utility demand form the fundamental axis, with new data center-related demand added on top. Since the power equipment industry requires considerable time from ordering to actual revenue recognition, the currently secured order backlog and new ordering trends are likely to be reflected sequentially in future performance.

However, the timing of actual performance reflection may vary depending on raw material prices, exchange rates, the schedule of U.S. power infrastructure investment, and the pace of data center construction.

[Securities firms' target prices and investment opinions are based on the respective securities firm's analysis and forecasts and may differ from actual stock price movements. Stock investing may result in principal loss depending on corporate performance and market conditions, and investment decisions and responsibility rest with the investor. This article is not intended to recommend the purchase or sale of any specific stock. This article was written with AI assistance.]