Power Equipment as Solid as Semiconductors Is Just Starting? | Lee Jae-chan, Hana Securities Myeongdong Financial Center Deputy

Summary

Lee Jae-chan, a Hana Securities deputy, discusses Korean power equipment stocks as a core market theme. He argues that strong EPS growth, order backlogs through 2030, and AI/data-center grid demand support further medium-term upside even after the recent correction. His top pick is Hyosung Heavy Industries, followed by LS Electric, with Hyundai Electric leveraged to data-center transformer orders. He also flags short-term KOSPI supply risk and big tech capex as the main risk to the trade.

• The market rose on semiconductor strength, but Lee sees short-term KOSPI supply risk from heavy individual-investor selling overhead.
• Korean power equipment EPS growth is about 40% and order backlogs extend to 2030, supporting medium-term upside.
• Hyosung Heavy Industries is the top pick due to ultra-high-voltage transformer margins and existing Memphis and Utah capacity.
• LS Electric is the second pick because of switchgear leadership, reference orders, and fast revenue recognition.
• Hyundai Electric's data center order share is expected to jump from 1.8% in 2025 to 16% next year.
• ERCOT interconnection queue data and Order 2023 are used as leading indicators for power equipment demand.
• Big tech capex and capacity digestion are the key risks to monitor.