Hyosung Heavy Industries is forecast to record a Q2 operating profit of 285.4 billion won, a 73.72% year-on-year increase. According to estimates compiled by Yonhap Infomax on the 26th from five major domestic securities firms submitted within the past month, the company's Q2 revenue is projected at 1.7988 trillion won, up 17.93% year-on-year. The rapid profit growth is driven by booming demand for ultra-high voltage transformers in the US, where severe power grid bottlenecks caused by AI infrastructure expansion have created a supply shortage. Hyosung Heavy Industries operates the only facility in the US capable of producing 765kV-grade transformers, located in Memphis.
Profitability improvements are outpacing revenue growth. In the previous quarter, revenue increased approximately 26% while operating profit surged 49%. The US market, where Hyosung Heavy Industries maintains local production capacity, offers particularly strong margins due to intensified supply shortages. Jang Nam-hyun, a researcher at Korea Investment & Securities, estimated that the company's US revenue share in Q2 improved by 10 percentage points compared to the previous year.
Middle East Project Revenue Recognition May Face Delays
Some project revenue recognition may be delayed due to conflicts in the Middle East. SK Securities noted that the Middle East market accounts for just over 10% of total revenue, with a significant portion directed to Saudi Arabia, meaning geopolitical issues could act as temporary disruptions.
Joint Venture with Quanta Services to Begin Production in October
A joint venture with US energy solutions company Quanta Services, announced in June, is scheduled to begin producing ultra-high voltage circuit breakers in the US starting in October. Son Hyun-jung, a researcher at Yuanta Securities, stated that Hyosung Heavy Industries is the only domestic power equipment company to secure production bases for both ultra-high voltage transformers and ultra-high voltage circuit breakers in the US, strengthening its competitiveness in North American ultra-high voltage package orders.
Analysts See Stock Price Correction as Excessive
Securities analysts view the recent stock price correction as excessive. Hyosung Heavy Industries' stock price peaked at around 4.7 million won in early May before declining steadily, closing at 2.681 million won on the 24th. Son Hyun-jung stated that new order targets are likely to be revised upward in the upcoming earnings announcement, adding that profit capacity and order visibility remain intact despite recent price adjustments. Her target price is 5 million won.
FAQ
What is Hyosung Heavy Industries' Q2 operating profit forecast?
Hyosung Heavy Industries is forecast to record a Q2 operating profit of 285.4 billion won, representing a 73.72% year-on-year increase, according to estimates from five major domestic securities firms compiled by Yonhap Infomax on the 26th.
Why is Hyosung Heavy Industries experiencing rapid profit growth?
The company's profit growth is driven by booming demand for ultra-high voltage transformers in the US, where AI infrastructure expansion has created severe power grid bottlenecks. Hyosung Heavy Industries operates the only US facility capable of producing 765kV-grade transformers, located in Memphis.
When will the joint venture with Quanta Services begin production?
The joint venture with Quanta Services, announced in June, is scheduled to begin producing ultra-high voltage circuit breakers in the US starting in October.
