Mirae Asset Securities logo

On track to meet order guidance

3Q26 preview: Above-consensus results likely on growth in electric business

For 3Q26, we expect LS Electric to report revenue of W1.74tr (+43% YoY; 4.4% above the consensus) and operating profit of W195.7bn (+94% YoY; 3% above the consensus). As in 2Q26, we estimate that higher sales of switchgear and extra-high-voltage (EHV) transformers in the electrical infrastructure business continued to drive company-wide results. A greater contribution from high-margin North American projects in 2H26 also likely supported profitability, with the electric division’s OP margin estimated at 13.7%. Stable raw material prices and the effects of ASP increases implemented in 2Q26 likely offset the impact of the lower USD/KRW rate in 3Q26. While tariff refunds and one-off costs could cause actual operating profit to differ somewhat from our estimate, these factors are temporary, and we expect the underlying improvement in profitability to continue over the medium/long term.

Order momentum remains strong in 2H26

Order momentum remains strong in 2H26. In 3Q26, the company expanded an existing US data center power distribution contract to W230.8bn and secured a W48.6bn distribution solutions contract with Bloom Energy. In October, it also announced an additional W181.2bn order for data center power equipment. Although order intake may have moderated in 3Q26 compared to 2Q26, when the company secured around W2tr in new orders on strong switchgear demand, we expect the company to comfortably meet its full-year new order guidance of W6-6.5tr.

Notably, hyperscaler contracts now extend as far as 2030, suggesting a shift from one-off projects toward arrangements resembling long-term supply agreements, which should support recurring revenue. Longer delivery schedules and a greater share of long-term contracts should improve visibility on medium/long-term earnings growth.

Maintain Buy and TP of W280,000

We maintain our Buy rating and target price of W280,000 on LS Electric. While the recent share price correction has widened the gap with our target price, industry fundamentals remain favorable, and we see no grounds for lowering our medium/long-term earnings forecasts. Global peer valuations also remain stable. We believe investors should look beyond near-term share price volatility and focus on the favorable industry backdrop and the prospect for sustained medium/long-term earnings growth.