Mirae Asset Securities logo

Policy support, stronger demand, and tighter supply

Maintain Buy and TP of W74,000

We maintain our Buy rating and target price of W74,000 on CS Wind. Although there are market concerns over a potential gap in substructure orders in 4Q26 and the expiration of AMPC benefits after 2027, we expect substructure incentives and an improving US business environment to support earnings going forward. Earnings from 2028 onward will depend on: 1) improvement in the US subsidiary’s margin excluding AMPC benefits (currently around 3%); and 2) stronger ASP bargaining power as industry supply contracts. More importantly, from a medium-term perspective, wind installation forecasts are being revised upward even as competitors are reducing tower capacity. We therefore recommend focusing on CS Wind’s potential to benefit from longer-term industry restructuring rather than on short-term quarterly volatility.

2Q26 review: Substructure incentives boost earnings

For 2Q26, CS Wind reported operating profit of W86.0bn, rising 15.7% QoQ and beating the consensus (W78.9bn) by 9%. However, stripping away incentive effects in the substructure division, overall earnings were broadly similar to in 1Q26. Of the approximately W33.7bn in substructure operating profit, roughly half, or W17.0bn, came from incentives. The tower division reported operating profit of W52.3bn (9.0% OP margin), including a W30.9bn contribution from the AMPC, equivalent to a 5.3%p margin contribution.

US wind business environment begins to improve

The US onshore wind market is improving on both the policy and supply/demand fronts. On the policy side, US Department of Defense (DoD) reviews of onshore wind projects, which had been effectively frozen for around a year, resumed following a preliminary injunction issued by the US District Court in Oregon on Aug 6. As this is an interim measure pending a ruling on the merits, it is too early to conclude that the associated risks have been fully resolved. However, most of the affected projects―representing an estimated 30GW of capacity―were awaiting only DoD clearance. We therefore expect them to translate into actual demand starting with the 2027 installation cycle.